20 July 2008

The American Mainstream Media Says "Buy the Financials and Banks"

Good bottom call or siren song for a sucker's rally?

We think its the latter. Right now the banks, especially the investment banks, are obtaining a balance sheet smokescreen cover from the New York Fed.

In the short term we are going to lay off the short side on the financials and watch what happens, looking for a place to jump back on that trade. We won't fight the Fed, but we are not drinking the Kool-Aid either.

Why not buy the financials, just for a trade? It might work. We'd rather buy gold and play our gold-oil cross trade.

The next downdraft, when it comes, is likely to be breath-taking.

What to Bank On - Barron's

Hopes and Hints that Financial Stocks Have Finally Touched Bottom - New York Times

Jitters Ease as Citi, Rivals Show Signs of Bottoming Out - Wall Street Journal