Top 2%
WB should rally now that the bailout plan will be approved on Monday
Started Sep 28 at 3:31 ET (By MasterOFate)
Symbols: GLD, JPM, SSO, REW, FSN, AG, SDD, WFC, MKTY, DUG, STD, DXD, FXP, SMN, CDS, GG, WB, GDX, ABX, TWGP, MZZ, SKF, EEV, WAMUQ, TWM, C, SH
In my opinion, Wachovia (WB) was hit with bad media press because WaMu (WM) was taken over by the FDIC. Many articles scared investors by pointing to raise in credit-default-swap for WB debt. But they failed to mention that WB's CDS on Friday was just a fraction of what the WaMu CDS before WM failed.
Now that the bailout plan will be passed on Monday, the bankruptcy of WB can be taken off the table, in my opinion. WB can sell its toxic assets to the US gov't and raise more capital since the rest of its assets are the more attractive whole mortgage loans not CDOs. This should restore confidence with its bank customers as its balance sheets become stronger.
This bailout should also increase the chance of an acquisiton of WB at an attractive multiple because it has more alternatives than before the bailout. It seems Citigroup (C) is closer to a buyout of WB that either Wells Fargo (WFC) or Santander (STD).
I sure hope that WB will rally on Monday because I have real money riding on it.
Top 4%
DOMINATION
Sep 28 at 7:19 ET
I agree that is a good possibility, but there are other factors that make it seem not 100%. I think it would be ok for WB to fail, but some of you top gurus are betting on it, thus this portfolio is too, so I hope all of you are right!
Top 2%
MasterOFate
Sep 29 at 8:00 ET
Unfortunately, WB is plunging this morning. It doesn't look good for us, WB shareholders or renters.
Top 1%
beancounter
Sep 29 at 8:21 ET
WB is gone. Premarket is 1.77 - you might be able to grab it on a wild bet and get it up to 2.50 today if this vote passes.
Top 4%
Gurughantal
Sep 29 at 9:05 ET
I hold WB and now i see it trading at 0.63 I got powned.
Top 2%
MasterOFate
Sep 29 at 9:29 ET
I think the bill will passed but it's too late for WB. After JPM marked down the value of option-ARM when JPM bought WM, WB had to writedown its value as well and so it needed more capital... This is a hard lesson for me to learn. I have to let the stock price tells and not rely too much on fundamental analysis.
Top 6%
br34ch
Sep 29 at 11:13 ET
By the way, what's wrong with MarketGuru?
I mean look up WB on Google Finance and you'll see crazy jump of 4900% of the stock, but at MG it shows the price of 10$ per share.
Top 1%
DowJonesDave
Sep 29 at 11:16 ET
It's not open yet. No trading
Top 2%
MasterOFate
Sep 29 at 11:24 ET
NYSE didn't allow WB to open for trading. C is buying WB banking operation for $2.1B in stock. WB's remaining assets (AG Edwards and Evergreen Investment operations) will continue to be public company.
Top 2%
MasterOFate
Sep 29 at 2:15 ET
I'm shocked that the plan didn't passed the House!!! I'm buying SSO into this plunge.
Top 1%
dirtyharry
Sep 29 at 3:04 ET
I think I've said it until I was blue in the face: DON'T OWN FINANCIALS right now. It doesn't matter how cheap they appear to be. Buying financials right now is nothing more than gambling. Don't be fooled by FNM and AIG popping up and down 30% a day. It's a suckers game. You must wait for this storm to pass until companies can be valued properly again. Don't buy C, don't buy WFC, and don't buy WB because it dropped, etc etc etc. If you really have to play financials, wait for them to rally and then buy SKF to short them. Only, don't even do that until the gov't gets out of the way and allows full short selling again. Why risk your money with madness? I'm mostly in cash right now with some gold and natural gas positions. I'm pretty much even on a 500+ pt down day (gold is up, gas is down).
When this market dump is over, I am now 85% cash, ready to go. Guess what I won't be buying: Financials. I don't care what the price is. It's the value that matters. After you lose all of your money gambling on financials you might learn, or you can just follow this advice and save your money.
Top 1%
beancounter
Sep 29 at 3:24 ET
Amen - at this point there's just watching and waiting. and using play money on MG.
Top 1%
blacktuna
Sep 29 at 4:02 ET
So what do you guys think.. besides shorting - is there anything at all worth buying these days?
Top 4%
DOMINATION
Sep 29 at 4:08 ET
According to this portfolio which is based off of top 10% of you Gurus, only the shorts and gold made profit today. So if you don't have any gold, then I'd make some purchases in gold mining. There's lots of value out there, but if there is no money to make loans and have credit then there's nothing.
Top 1%
dirtyharry
Sep 29 at 8:46 ET
I'll add that you can go with GDX for the golding miners - but I would wait. I'll make a prediction here. At some point there will be a bailout deal reached. When that deal is reached, we may get a rally which could pull money out of gold (safe haven) and back into the market (not so safe haven). Gold may then have a short term drop. That's the time to make the move. The bailout in the long term will create inflation and gold should rise. This is why I prefer Jan 2010 at the money options on GLD. It should provide enough time and leverage to get paid off for a big move up in gold.
Top 4%
DOMINATION
Sep 29 at 11:00 ET
According to the top 10% of gurus making a profit of more than 10%, these were the primary stocks held (although some were already in this portfolio, the rest were purchased): ABX, GG, GLD, EEV, DXD, SMN, FXP, MKTY, FSN, SDD, TWGP, TWM, MZZ, REW, SH
Top 2%
MasterOFate
Sep 30 at 3:39 ET
Tading updates: I sold WB and SSO on today's rally. I'm buying DUG. I think tomorrow data on oil inventory could be bearish.