https://risksandreturns.com/ In search of asymmetric trading opportunities… en-US https://risksandreturns.com/2017/04/24/shorting-palladium-again/ https://risksandreturns.com/2017/04/24/shorting-palladium-again/ Mon, 24 Apr 2017 14:08:48 +0000 It’s not often that one gets an opportunity to execute the exact same trade based on the same investment thesis after closing out the initial trade profitably. But that is exactly what I am facing and decided to take advantage of by shorting Palladium last Friday at $802. https://risksandreturns.com/2017/02/17/selling-bank-of-america-nyse-bac/ https://risksandreturns.com/2017/02/17/selling-bank-of-america-nyse-bac/ Fri, 17 Feb 2017 15:22:11 +0000 I have sold out of my Bank of America (NYSE; $BAC) position yesterday at the close for a 94% gain. It was one year ago that I purchased BAC after it sold off hard due to recessionary fears. I believed there would be no recession and a major, profitable, and under-leveraged bank selling for 80% of tangible book with an earnings yield of 11% was a slam dunk. https://risksandreturns.com/2016/11/08/why-my-fear-of-a-trump-presidency-leads-me-to-support-clinton/ https://risksandreturns.com/2016/11/08/why-my-fear-of-a-trump-presidency-leads-me-to-support-clinton/ Tue, 08 Nov 2016 23:49:32 +0000 Being just moments away from the release of results for the US Presidential election, I thought I would reflect on the importance of this election. Electing the president of the United States is always an important decision because the power that the winner is entrusted with can radically change the lives of billions of people across the world. https://risksandreturns.com/2016/10/30/selling-alibaba-group-holding-via-yahoo-nyseyhoo/ https://risksandreturns.com/2016/10/30/selling-alibaba-group-holding-via-yahoo-nyseyhoo/ Sun, 30 Oct 2016 23:22:59 +0000 On Friday, I closed my position in Yahoo (NYSE:YHOO) at $41.85. I purchased the stock at the beginning of the year during the stock market selloff as a cheaper way of buying Alibaba (NYSE:BABA). At the time I bought Yahoo, China’s economic growth was slowing and investors ignored Alibaba as a play on Chinese e-commerce that could withstand, and perhaps benefit from a China slowdown as the economy shifts its reliance away from investment towards consumption. https://risksandreturns.com/2016/06/28/india-the-standout-emerging-market-part-1/ https://risksandreturns.com/2016/06/28/india-the-standout-emerging-market-part-1/ Tue, 28 Jun 2016 19:44:58 +0000 I am a long-term bull on India, However, I do have some concerns that make me cautious in the near to intermediate term. As a result, I currently only have a tiny position allocated to Indian stocks, but am ready to increase my position substantially upon a significant selloff or once my confidence increases that the Indian economy is about to accelerate. https://risksandreturns.com/2016/05/24/boj-soon-to-take-its-deflation-fight-to-another-level/ https://risksandreturns.com/2016/05/24/boj-soon-to-take-its-deflation-fight-to-another-level/ Tue, 24 May 2016 17:36:22 +0000 I believe Japan’s aggressive monetary policies will continue to reward those who invest in its stock market. To review, the first arrow of Japanese PM Shinzo Abe’s “three arrows” of economic policy, aggressive monetary easing, was implemented by BOJ governor Haruhiko Kuroda to eradicate Japan’s long-standing deflationary pressures. In April 2013, soon after Kuroda became Governor, the BOJ introduced “Qualitative and Quantitative Easing” (QQE) which has since been expanded. Currently, the BoJ is buying annually 80 trillion yen of JGBs, 90 billion yen of JREITS, and 3.3 trillion yen of ETFs. The https://risksandreturns.com/2016/04/18/im-not-betting-on-emerging-markets-yet/ https://risksandreturns.com/2016/04/18/im-not-betting-on-emerging-markets-yet/ Mon, 18 Apr 2016 12:52:30 +0000 After topping out between 2008 and 2010, emerging markets have woefully underperformed the US. I remember at the top the extreme amount of optimism that investors had towards China and other developing economies, while the US was shunned. https://risksandreturns.com/2016/03/31/assessing-the-current-rally/ https://risksandreturns.com/2016/03/31/assessing-the-current-rally/ Thu, 31 Mar 2016 11:37:31 +0000 Since the February 11th bottom at 1810, the S&P 500 has rallied 14%. The market is now within 3% of an all-time high. Although the market could pullback in the short-term, the technicals of the rally lead me to believe that the February 11th bottom could hold. https://risksandreturns.com/2016/02/11/managing-a-drawdown/ https://risksandreturns.com/2016/02/11/managing-a-drawdown/ Thu, 11 Feb 2016 02:45:57 +0000 I have been mostly on the right side in calling the stock market’s short term movements over my investing lifetime. Although accurately predicting the market’s short term gyrations is much more difficult than forecasting where the stock market will be in 5 years, I believe it is feasible with well-reasoned analysis which incorporates market sentiment, technical analysis, stock market history, macroeconomic fundamentals, valuation, and the simple view that markets are inherently cyclical. https://risksandreturns.com/2016/02/04/buying-bank-of-america-nyse-bac/ https://risksandreturns.com/2016/02/04/buying-bank-of-america-nyse-bac/ Thu, 04 Feb 2016 05:46:19 +0000 The relentless selloff in US bank stocks continued today as several of them hit new 52-week lows intraday before staging a strong rally into the close. I believe the selling is unjustified and decided to buy Bank of America ($BAC) at $12.66. The current market reminds me of the 2011 market when fears of a Eurozone breakup caused European bank stocks to plummet. US bank stocks also got hit hard due to fears of European debt holdings, a possible recession, and falling interest rates. https://risksandreturns.com/2016/01/14/buying-goldman-sachs-nyse-gs/ https://risksandreturns.com/2016/01/14/buying-goldman-sachs-nyse-gs/ Thu, 14 Jan 2016 05:27:57 +0000 Financial stocks have been hit hard in recent days due to concerns about an economic recession and declining interest rates. Financials are leveraged to the economy so it is no surprise that they are underperforming the market. Since I do not believe that the global slowdown will infect the US, I am taking advantage of the recent decline in equity prices to buy high-quality names. One attractive opportunity that I am taking advantage of is buying Goldman Sachs ($NYSE). https://risksandreturns.com/2016/01/13/the-return-of-the-9798-playbook/ https://risksandreturns.com/2016/01/13/the-return-of-the-9798-playbook/ Wed, 13 Jan 2016 02:03:15 +0000 My long-term bullish outlook on US stocks is predicated on a US economy that continues to strengthen in the face of a global slowdown. This has happened before. FT Alphaville compares the current period to 1997/1998: https://risksandreturns.com/2016/01/05/buying-alibaba-group-holding-nyse-baba/ https://risksandreturns.com/2016/01/05/buying-alibaba-group-holding-nyse-baba/ Tue, 05 Jan 2016 07:47:48 +0000 During the recent market volatility, I decided to build a position in Alibaba Group Holding (NYSE: BABA). This might be surprising to those who are familiar with my long-standing bearishness on the Chinese economy. Aside from buying one Chinese stock 5 years ago (which turned out to be a fraud), I have always traded China from the short side. https://risksandreturns.com/2015/12/22/bull-market-to-resume-in-2016/ https://risksandreturns.com/2015/12/22/bull-market-to-resume-in-2016/ Tue, 22 Dec 2015 18:02:52 +0000 And now we are behaving hysterically at the prospect of just one? It’s a bit of a joke, really… We might have a wobbly few weeks when they do move, but I’m sure the Fed will stroke us like you wouldn’t believe and the markets will settle down, and most probably go to a new high. -Jeremy Grantham on the Fed’s eventual first rate hike. (8/6/15) http://on.ft.com/1InJDDg https://risksandreturns.com/2015/08/25/im-100-long-for-the-1st-time-in-years/ https://risksandreturns.com/2015/08/25/im-100-long-for-the-1st-time-in-years/ Tue, 25 Aug 2015 04:47:41 +0000 The 5-15% multi-month correction that I was waiting for since May has finally arrived. Last Friday I tweeted that I increased my net long exposure to stocks from 25% to 75%. And I tweeted again on Monday morning that I was using my remaining cash balance to buy stocks during the early morning flash crash. https://risksandreturns.com/2015/07/30/a-market-correction-is-up-to-the-fed/ https://risksandreturns.com/2015/07/30/a-market-correction-is-up-to-the-fed/ Thu, 30 Jul 2015 13:51:27 +0000 Since I turned cautious on stocks in early May, the market has been treading water with minimal volatility. If the year ended today, the S&P 500’s intra-year decline of 4% would be the 2nd smallest in 35 years. https://risksandreturns.com/2015/05/05/time-to-be-cautious-of-us-stocks/ https://risksandreturns.com/2015/05/05/time-to-be-cautious-of-us-stocks/ Tue, 05 May 2015 14:07:05 +0000 I have been quite bullish on the US economy and US stocks over the past couple of years. I viewed every correction as an opportunity to increase my long position. In fact, the near 10% correction in October got me 90% invested – one of my highest exposures to US stocks ever. https://risksandreturns.com/2015/03/30/shorting-palladium/ https://risksandreturns.com/2015/03/30/shorting-palladium/ Mon, 30 Mar 2015 14:57:37 +0000 A lot of my financial wealth was created riding the great commodity super cycle during the previous decade. In 2004, when I first had enough money to invest, it was apparent to me that the industrialization of China, the underinvestment in mining, and easy US monetary policy would create an ideal setting for commodities to rally. To speculate on this, I bought a basket of Junior gold exploration companies and watched their value multiply several-fold. https://risksandreturns.com/2015/03/03/closing-fiat-italy-fca/ https://risksandreturns.com/2015/03/03/closing-fiat-italy-fca/ Tue, 03 Mar 2015 03:16:33 +0000 Today I sold out of my position in Fiat Chrysler at a price of €14.10. I established the position on July 28th of last year and enjoyed an 80% gain in 7 months. The company is benefiting from an improving European economy, a weaker euro, and the upcoming spinoff of Ferrari. https://risksandreturns.com/2015/02/13/buying-aig-nyseaig/ https://risksandreturns.com/2015/02/13/buying-aig-nyseaig/ Fri, 13 Feb 2015 21:06:19 +0000 Yesterday I purchased shares of AIG (NYSE:) after its earnings release and tweeted about it. Last year, Barron’s wrote a bullish article on the company and did a good job of explaining why it was too cheap. At my purchase price of $52.50, AIG trades at only 75% of book value (excluding accumulated other comprehensive income). That is a valuation given to companies losing money and with troubled balance sheets. However, AIG is has been profitable the last 4 years and is trading at 10 times this year’s earnings. https://risksandreturns.com/2015/01/28/us-economy-ready-to-heat-up/ https://risksandreturns.com/2015/01/28/us-economy-ready-to-heat-up/ Wed, 28 Jan 2015 02:37:05 +0000 Later this week the Bureau of Economic Analysis will report that the US economy wrapped up its 5th consecutive year of GDP growth. Since the average post-war expansion has lasted 5 years, it may feel like the current expansion is getting long in the tooth. However, rather than looking for a recession, I am of the view that the economy is on the verge of accelerating. https://risksandreturns.com/2014/11/03/buying-nikkei-futures-priced-in-usd/ https://risksandreturns.com/2014/11/03/buying-nikkei-futures-priced-in-usd/ Mon, 03 Nov 2014 18:05:32 +0000 I tweeted on Thursday that I thought that there was a greater than expected chance for the Bank of Japan to positively surprise markets and increase its QE program. The BOJ did increase its QE amounts and I tweeted that I bought Nikkei futures as the market exploded higher. https://risksandreturns.com/2014/10/20/buying-homebuilders-nyseitb/ https://risksandreturns.com/2014/10/20/buying-homebuilders-nyseitb/ Mon, 20 Oct 2014 05:31:29 +0000 My bullish view on single family housing starts (as detailed in a recent post), coupled with the recent sell off in homebuilders caused me to buy the iShares US Home Construction ETF (NYSE:ITB). I tweeted about it late Wednesday night and will track it in my portfolio page using that day’s closing price of $22.17 as my initial price. https://risksandreturns.com/2014/09/04/single-family-housing-starts-set-to-reaccelerate/ https://risksandreturns.com/2014/09/04/single-family-housing-starts-set-to-reaccelerate/ Thu, 04 Sep 2014 17:03:45 +0000 In my view, one of the most obvious secular growth stories is the rebound in single family home construction. Although single family housing starts increased off of exceptionally depressed levels in 2011, they have stopped growing over the past year and remain less than half of past cyclical peaks. https://risksandreturns.com/2014/08/11/closing-russia-nysersx/ https://risksandreturns.com/2014/08/11/closing-russia-nysersx/ Mon, 11 Aug 2014 04:22:42 +0000 Last Friday I closed my long position in the Russia ETF (RSX) at $24.80 which is equal to my initial buying price. As I mentioned in this post, if the RTS index were to have a weekly close below 1220 I would close the trade. As it turned out, the RTS finished the week on August 1st at 1212 for a second false breakdown this year making the triangle pattern unreliable. https://risksandreturns.com/2014/08/03/china-no-longer-a-2014-risk/ https://risksandreturns.com/2014/08/03/china-no-longer-a-2014-risk/ Sun, 03 Aug 2014 14:42:07 +0000 In a recent post, I discussed how the current slowdown in the Chinese economy posed a near term risk for global financial markets. However, I am now finding myself less concerned as the improvement in recent data along with increasing government support and accelerating growth in bank lending suggests that the economy could be stabilizing. https://risksandreturns.com/2014/07/28/buying-fiat-italy-f/ https://risksandreturns.com/2014/07/28/buying-fiat-italy-f/ Mon, 28 Jul 2014 03:34:25 +0000 I recently purchased Fiat’s stock listed in Italy after coming across a persuasive presentation by Michael Guichon, a Columbia University MBA student, who presented his bull case for Fiat at the 2014 Ira Sohn Contest. A panel of judges including Bill Ackman, Joel Greenblatt, Seth Klarman, and Michael Price selected Guichon as the winner. Below, Guichon summarizes why he likes Fiat’s stock. I will be tracking Fiat’s performance here. https://risksandreturns.com/2014/05/29/china-could-scare-markets-this-summer/ https://risksandreturns.com/2014/05/29/china-could-scare-markets-this-summer/ Thu, 29 May 2014 20:05:00 +0000 As I explained in a previous post, China has a massive credit bubble that inevitably will deflate. Almost always the onset of debt deflation causes a market panic as disappointed investors run for the exits fearing falling asset prices, bankruptcies, and a sharp economic slowdown. I believe there is an elevated risk that China could face a Minsky moment in the coming months. https://risksandreturns.com/2014/05/20/buying-russia-nysersx/ https://risksandreturns.com/2014/05/20/buying-russia-nysersx/ Tue, 20 May 2014 14:44:59 +0000 I recently bought the Market Vectors Russia (NYSE:RSX) etf at $24.80. I am bullish on Russian equities based on its terrible past price performance, negative sentiment, dirt cheap valuation, and attractive chart pattern. https://risksandreturns.com/2014/05/19/chinas-growth-will-slow-for-years/ https://risksandreturns.com/2014/05/19/chinas-growth-will-slow-for-years/ Mon, 19 May 2014 17:03:06 +0000 While China’s economy has slowed down from over 10% in 2010 to 7.4% last quarter, economists unanimously believe growth will soon bottom around 7% and maintain that pace for the next several years. As I will discuss, China’s economy is structured in such a way to make that forecast implausible. More likely, China will continue to decelerate for a few more years after which growth will bottom in the low single digits. https://risksandreturns.com/2009/11/05/closing-november-09-fed-funds-futures/ https://risksandreturns.com/2009/11/05/closing-november-09-fed-funds-futures/ Thu, 05 Nov 2009 12:05:45 +0000 Recently I have closed my long position in the November 2009 fed fund futures contract at over 99.80 for an exceptional gain. I believe the market is pricing in too much tightening for 2010 so I have purchased the January and February 2011 contracts at an average price of 98.55. https://risksandreturns.com/2009/03/22/update-buying-november-09-fed-funds-futures/ https://risksandreturns.com/2009/03/22/update-buying-november-09-fed-funds-futures/ Sun, 22 Mar 2009 20:53:41 +0000 Last November I started going long November ‘09 fed fund futures at 98.25 (i.e. the market priced in an effective Fed funds rate of 1.75%). I was hoping that the Fed would slash rates to 0.50% and keep it there through November so that I could net a profit of over $5,000 per contract. As it turned out the Fed reduced its rate to fluctuate within a range of 0% to 0.25%. Since the economy has continued to deteriorate and I can’t see how a sustained recovery can take hold this year, the funds rate is likely to remain under 0.25% during the remainder of 2009. https://risksandreturns.com/2009/02/18/what-caused-the-bust/ https://risksandreturns.com/2009/02/18/what-caused-the-bust/ Wed, 18 Feb 2009 20:47:48 +0000 Marc Faber, who predicted the economic and financial crisis, has written an excellent piece in today’s WSJ blaming government policies rather than the free market for getting us into the current predicament. Because of the government’s ineptitude he believes that the best solution is to do nothing and allow the free market to sort out the mess. https://risksandreturns.com/2009/02/08/a-rough-10-years/ https://risksandreturns.com/2009/02/08/a-rough-10-years/ Sun, 08 Feb 2009 11:46:15 +0000 The New York Times has created an nice graphic which shows that for the 10-year period ending in January, the S&P 500 had its worst inflation- and dividend-adjusted performance in 82 years. https://risksandreturns.com/2009/02/02/foreclosures-are-the-solution-not-the-problem/ https://risksandreturns.com/2009/02/02/foreclosures-are-the-solution-not-the-problem/ Mon, 02 Feb 2009 11:45:32 +0000 In the WSJ, there is a well reasoned argument by Ramsey Su of why government attempts to prevent the current surge of foreclosures from occurring is actually harmful. A house is foreclosed on when either the homeowner is unable to make his mortgage payment or when he refuses to pay even if he has the capacity to make the payment because he has negative equity in his house. In the first case, a foreclosure relieves the homeowner of an expense that is too burdensome. In the second case, a foreclosure immediately improves his balance sheet because his mortgage debt is wiped out. https://risksandreturns.com/2009/01/24/crisis-investing-for-the-rest-of-the-90s-by-douglas-casey/ https://risksandreturns.com/2009/01/24/crisis-investing-for-the-rest-of-the-90s-by-douglas-casey/ Sat, 24 Jan 2009 09:33:59 +0000 At certain points in our lives we come across individuals who profoundly alter our outlook on life. For me, one figure is Doug Casey, a writer and financial speculator. In 2004, when I decided to play the junior resource market, I subscribed to a number of newsletters dedicated to stock picking in that sector. Casey’s newsletter, the International Speculator, quickly became one of my favorites: not because of its stock picks (though, they were quite profitable), but because of Casey’s commentary of his radical viewpoints on everything from economics and philosophy to politics and science. https://risksandreturns.com/2008/12/15/deflation-making-sure-it-doesnt-happen-here-by-ben-bernanke/ https://risksandreturns.com/2008/12/15/deflation-making-sure-it-doesnt-happen-here-by-ben-bernanke/ Mon, 15 Dec 2008 20:45:46 +0000 Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money syste https://risksandreturns.com/2008/11/11/valuing-stocks-relative-to-bonds/ https://risksandreturns.com/2008/11/11/valuing-stocks-relative-to-bonds/ Tue, 11 Nov 2008 11:35:24 +0000 A popular method for determining whether equities are cheap is to compare the stock market’s dividend yield with the yield on long-term government bonds. Using the amount of dividends paid by companies in the S&P 500 index during the past 12 months, the dividend yield is currently 3.22%. Meanwhile a ten-year treasury yields 3.75%. The following is a historical look at how dividend yields and long-term treasury yields compare. https://risksandreturns.com/2008/11/03/buying-november-09-fed-funds-futures/ https://risksandreturns.com/2008/11/03/buying-november-09-fed-funds-futures/ Mon, 03 Nov 2008 21:19:57 +0000 Last Friday I purchased fed funds futures contracts for November 2009 at 98.25. I went long fed funds futures earlier this year and closed the position in September with a huge gain. In retrospect, I could have made even more if I held on to the position, but I didn’t anticipate the Federal Reserve slashing the overnight rate by 100 basis points in October. https://risksandreturns.com/2008/10/26/copper-prices-return-to-earth/ https://risksandreturns.com/2008/10/26/copper-prices-return-to-earth/ Sun, 26 Oct 2008 13:22:24 +0000 Base metals prices have collapsed this year with losses particularly steep in just the past few weeks. For the last two years, I have been writing bearish posts on base metals with the viewpoint that when the global economy slumps, demand for industrial metals will decline significantly, and prices will fall. I even put my money where my mouth is and shorted base metals stocks last year. Now that prices of industrial metals have substantially declined, it is worthwhile to examine whether they have fallen too much. Here is a price chart of copper dating back to 1980. https://risksandreturns.com/2008/10/17/closing-short-position-in-mbia-calls/ https://risksandreturns.com/2008/10/17/closing-short-position-in-mbia-calls/ Fri, 17 Oct 2008 11:25:57 +0000 Today I closed my short position in MBIA’s January ‘09 call options with a strike price of $10 for 85 cents compared to my selling price of $4. I also closed a short position in the January ‘09 calls with a strike price of $15 for 35 cents compared to my $3.30 selling price. As I previously outlined, the bond insurers are going to be hit by an avalanche of claims and insurers like MBIA have under reserved. After a spectacular rally in August that took MBIA’s share price from $4 to $19, the market has come to accept my view as the stock has collapsed to as low as $5 last week. https://risksandreturns.com/2008/10/15/covered-short-position-in-us-treasury-bonds/ https://risksandreturns.com/2008/10/15/covered-short-position-in-us-treasury-bonds/ Wed, 15 Oct 2008 11:23:31 +0000 Today I covered my short position in the December contract of 30 year US Treasury bonds futures at $113.89. I initially sold the contract last Thursday for $118.29. This was only a small short term trade to play some lessening of fear after the US and Europe announced they would recapitalize the banking system. Although today’s stock market plunge seems to indicate that the market remains as fearful as last Friday, Treasury bonds have taken the hit that I expected. This may be due to concern about the huge supply of bonds that the US government will have to issue to finance all these bailouts. https://risksandreturns.com/2008/10/13/im-now-neutral-on-equities/ https://risksandreturns.com/2008/10/13/im-now-neutral-on-equities/ Mon, 13 Oct 2008 11:21:26 +0000 The recent stock market rout has left equities no longer trading at the expensive valuations that I had been concerned about. They aren’t cheap either, so I don’t plan to do any buying at current levels. But I have closed virtually all of my short positions leaving my portfolio with lots of cash. My reasoning for believing that stocks have become more fairly priced is based on my outlook for earnings and the multiple the market will assign to those earnings. https://risksandreturns.com/2008/10/13/shorting-us-treasury-bonds/ https://risksandreturns.com/2008/10/13/shorting-us-treasury-bonds/ Mon, 13 Oct 2008 11:19:06 +0000 Last Thursday I shorted 30 year US Treasury bonds futures which trade on the Chicago Board of Trade. I sold the December contract for $118.28. This is only a short-term trade based on my belief that the plan for governments around the world to directly recapitalize banks, guarantee interbank lending, and provide a blanket guarantee on all deposits would be enough to prevent a total financial system meltdown and restore confidence in banks. https://risksandreturns.com/2008/10/12/the-credit-market-panic-will-soon-subside/ https://risksandreturns.com/2008/10/12/the-credit-market-panic-will-soon-subside/ Sun, 12 Oct 2008 11:06:38 +0000 The credit markets have come to a standstill as evidenced by the skyrocketing TED spread. This is the difference in rates between three-month LIBOR and three-month T-bills and is a gauge of how fearful banks are to lend to one another. https://risksandreturns.com/2008/10/10/covering-short-position-in-american-axle-manufacturing/ https://risksandreturns.com/2008/10/10/covering-short-position-in-american-axle-manufacturing/ Fri, 10 Oct 2008 11:01:40 +0000 Today I covered my short position in American Axle & Manufacturing (NYSE: AXL) at an average price of $3.12 for a profit of 59% from where I initiated the position just two weeks ago. The stock has collapsed along with the general stock market and I am hoping that there could be a decent short-term bounce that will allow me to short the stock again. I don’t think the company or any of the major auto manufacturers can survive much longer. https://risksandreturns.com/2008/10/10/covering-short-position-in-suntrust-banks-nyse-sti/ https://risksandreturns.com/2008/10/10/covering-short-position-in-suntrust-banks-nyse-sti/ Fri, 10 Oct 2008 11:01:38 +0000 I have covered my short position in SunTrust Banks (NYSE:STI) at an average price of $33.22 for a profit of 26% in four weeks. As I have explained, SunTrust is worth significantly less than my covering price because the bank has still not taken the necessary write downs which will force it to raise capital. However, the stock market is incredibly oversold and due for a sharp counter trend rally. If that rally takes SunTrust back up to the low- to mid-forties than I might short the stock again. https://risksandreturns.com/2008/09/30/shorting-american-axle-manufacturing/ https://risksandreturns.com/2008/09/30/shorting-american-axle-manufacturing/ Tue, 30 Sep 2008 10:18:11 +0000 I am of the opinion that the US economy has just slipped into the worst consumer spending slump in decades. This will lead to a sharp pullback in big ticket purchases. Automobile sales, which tend to be financed, are especially vulnerable given the current problems in the credit markets. Moreover, the average US household owns almost two vehicles meaning that the market is saturated. Most new demand will come from replacement and this need, too, is declining as cars released in recent years are lasting longer. Another consideration is the rise in energy prices which is leading to a shift in de https://risksandreturns.com/2008/09/17/doubling-down-short-position-in-suntrust-banks-nyse-sti/ https://risksandreturns.com/2008/09/17/doubling-down-short-position-in-suntrust-banks-nyse-sti/ Wed, 17 Sep 2008 12:30:29 +0000 I have shorted some more shares of SunTrust Banks. My average price is now $45.16. I believe that it’s only a matter of time before the stock retests its July low of $25. https://risksandreturns.com/2008/09/16/closing-my-short-position-in-washington-mutual/ https://risksandreturns.com/2008/09/16/closing-my-short-position-in-washington-mutual/ Tue, 16 Sep 2008 12:28:31 +0000 Today I covered my shorts in Washington Mutual (NYSE: WM) at $2.25. I shorted WaMu in April at $11.94. It is my view that the nation’s largest savings and loan institution is insolvent and deserves to fail. However, Merill Lynch, too, deserved to go bankrupt but was bought out by Bank of America at a ridiculously high premium. Could Washington Mutual similarly be taken over at a big premium? According to Britain’s Daily Mail newspaper, JPMorgan Chase is in advanced talks to buy Washington Mutual. So far no other source is confirming this story, but it can happen.