Sunday, July 27, 2008

Citigroup




I was asked about Citigroup. Here is a my reply.

I don't care about Value or company fundamentals. All I care about is the price and where its going. That's all that matters when I buy or sell a stock. I'm just a guy that trades from his home. I'm not an analyst for individual stocks, but if I had to guess, I would say we are not out of the woods regarding the current housing crisis tied to many banks. Washington Mutual will go before Citigroup if there is a major bank that fails. I thought Goldman Sachs statement a few weeks ago, telling investors to SHORT Citigroup was outrageous (C was trading at $17 then). The fact that C was on the SEC banned naked short list is good for the company stock price. If you held a gun to my head and told me I had to choose to buy or sell C, with a holding period of 1 year, then yes I would buy, I would buy deep in the money LEAP Calls. Possibly averaging in at small pieces at a time. I said BAC was a buy when it was at $25, before it dropped to $18., now BAC is at $29.
I have a macro look in my trading because I trade bond futures and stock indices. My outlook is for bond yields to rise,(Bond futures down), and possible bounce in the stock market in certain sectors, probably financials. 30 yr mortgage rates are on the rise. I'm thinking of switching my 401k to a bond based fund, instead of the 50/50 bond/stock ratio that I currently have that is losing money. Without a doubt, the FED will raise rates within the next year, possibly the next meeting, and mortgage rates are going to rise too. The double edged sword of rising mortgage rates and declining housing prices that is occurring has me worried.

FRE- WEAK MARKET AND FEAR OF INFLATION AMONG REASONS FOR SPIKE IN MORTGAGE RATES THIS WEEK

10 comments:

John on 2:24 PM said...

IMO this is the best thing you've posted yet and hope you realize that. GS and other institutions are just shorting each other to make up losses from the mortgage industry. Citigroup is the largest but according to the CEO he was willing to unwind its revenue and income machines since its like a huge bond collecting money to say the 4th or 5th largest bank in the country. (Bloombergs did an article months ago) The financial ETF will do well long-term(XLF I think) Also lets not forget baby boomers are retiring so like my professor said expect a fire sale of bonds to pay being SS is an IOU anyway and no money in it. Par value goes down interest rates go up. Plus, its like the 70's/80's all over again with commodity and oil prices rising.
Pulte homes CEO said new homes are stable but existing homes could fall another 10-15%. Imagine if you bought a home the past few years you'd be down 30-50%. WaMu is fine as long as no run on the bank which has destroyed a few now...we'll see.

Anonymous said...

.........of course you do not care about value or fundamentals of a company because you have no formal training or education regarding this matter. I am sorry to tell you but all what you are is a speculator or gambler,, and guess who is winning in the end ?

Anonymous said...

I just love it when I browse through some blogs here and read where you guys get your opinions from or should I say on what they are based on.
Please get a clue and stop repeating one another.

TexasHoldemTips on 11:31 PM said...

The chart tells a very compelling story about how the market sees Citigroup. Until it shows signs of a rebound, this is one to stay away from. You can get killed trying to be smarter than the market. Just ask anyone who thought that the bottom was in November. Or January. Or March.

HPT on 11:55 PM said...

Anon,
Your telling me I'm a speculator. You are indeed correct. Anyone that buys or sells a stock is a speculator. Thank you for reminding me what I do. I will look at my P/L to see who is winning at the end of the day.

Anonymous said...

o.k. thank you for admitting this...
now next step > speculator = casino
who wins in the end ???
Please do not come here with the phrase that you are looking only to take trades where you have an edge.
Since you define where the edge is..
it is by definition now edge anymore.

Anonymous said...

feds not raising untill after the election, at the earliest.

HPT on 8:48 AM said...

Anon,
I'm well aware of how much I suck as a trader. I've admitted I'm probably the worst trader in the world. I have a fucking blowup video where I lost 30k in a day. I suck. I know I'm a gambler. I probably won't be here in a month. Thank you for reminding me how much I suck.

Anon,
You may be right about the Fed not raising until after election, but what are your reasons?

You guys need to back up your statements.

John on 9:48 PM said...

What I don't get is anonymous people going down an out of the way path to criticize someone. When does an investment become a gamble? When do fundamentals finally matter...CRM makes .15 and over $70 yet DRYS is a cash cow making $18 with 6 oil rigs coming online over the next 5yrs. making an add'l $10 per share trading slightly over $73? The ships as scrap metal are worth $85. When is it all not just gambling being the outcome isn't certain in any stock and shares are traded on the open market out of that companies hands? Some of the biggest names...Wilbur Ross, Joe Louis, Icahn or Charles Dow and Russell are/were nothing more than traders. Human psychology with greed/fear shows up in technical analysis for hundreds of years now back to the tree on Wall St.

HPT on 10:30 PM said...

Great comment John. I'm just a guy that trades from home. I have no insider information edge, I'm not a stock analyst, and the only thing that makes since to me is price, because the price doesn't lie. John said it best. This market works on fear and greed. Always has.

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