I wont go into details about the recent troubles of IndyMac, Fannie Mae or Freddie Mac since there are much better sources out there than this blog. I do want to give a heads up of how to profit from the recent bank woes. The answer is Ultrashort Financial (SKF). This one is a momentum play. SKF is exactly as it sounds, a short on financial related companies with a mixture of banks, brokers, investment houses, mutual funds , insurance companies and REITS. This play is good because one isn’t directly shorting the stocks so the risk is limited. Second, it’s a bear market, with financial sector companies leading the sell off. What is even more interesting is the largest holder of SKF is ironically UBS. If finance companies are buying shares that hedge against there own fundamental business line, its saying something. I would hold this throughout summer, even into the 4th quarter.

Look at its chart. Beautiful uptrend, volume etc.
BTW if you think that this has gone up too much too fast, remember that the average recession will see the Dow and the major indexes retrace 30 percent, that means 10 percent more to go.

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