Saturday, October 4, 2008

Stock Chasing for double digit returns

Some hedge funds must be doing well, the higher risk player who havent been using more conservative assets like MBS must be doing well in the current market as must those hedge funds that properly hedged, I personally have been getting high double digit returns just chasing stocks of damaged goods banks and inurance companies that get bought out.

Following WB to their lows and buying in has proven to be a very interesting strategy as you watch the stock increase in value exponentially within a matter of days with take over rumors. Cents on the Dollar WB is now back at a healthy $6 plus so the question is who is next to fall and how well will they rebound.

Wels Fargo has to have a pretty shakey balance sheey if they cant sell the shares they are issuing to pay for a Wachovia takeover so look for them to take a tumble.

Goldmans looks a super safe bet as always their accounting department knows how to weather pretty much any storm and move underperforming assets off the balance sheet. Lloyd Blankfeld was declaring profits whilst everyone else wrote down in 2007, I stated it was suspicious and I dont think i was proven wrong. Plus Buffet is a great benefactor to have behind any company.

Oil is going to contnue to drop as the speculators who have been overinflating prices run out of balance sheet to back their speculation, $90 a barrel or less would seem reasonable.

General Motors and Ford should be softening up pretty fast as they have low and constantly falling sales in the current economy and how their finance divisions will hold up will be a wonder to behold.

Copyright Jonathan Rose 2008 - Creative Commons License

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