I’m not offering any advice on any particular stock even though I’m still in the market. The past 3 weeks have been just insane. Bank failures, buyouts, acquisitions, 700 pt dow swings, 10 percent snp swings and its not over.

Everyday companies such as Wachovia, Freddie, Fannie, the former LEH and other stocks hit hard by this bank crisis go up and down a ridiculous percentage. But this isn’t exactly investing if you dare to enter, this is 50/50 click and pray hoping to catch the right wave at the right time. Oh wait, you can’t catch the wave down anymore, my bad.

I’ve been thinking about how to make money off this mess. Now, first we have to make some assumptions. Lets assume shorting is available. These swings in these stocks are ridiculous, 20% minimum almost daily. If you think theres a 50% chance of an up swing and 50% chance of a down swing, why not just set a stop loss of say 10% and a limit sell of 20% gain. I know there are alot of flaws to my approach, the very one I used to short both WB and WM but get stopped out and then didn’t reenter. The problem I would say is continually doing it and having those stop losses taken out at exactly 10%. Since news usually comes out overnight and I don’t know if your stop loss will execute into after hours. If it doesn’t you could lose big. Also, even if it did, most of the movement of a stock like the ones that have been bouncing up and down don’t move as big intraday so you got to risk holding overnight which is substantially riskier.

I know its flawed, just my 2 cents though

This has been the most eventful week in Wall Street since the 1929 crash and a once in a lifetime experience for many. Lehman failed, AIG was bailed out, the Bush and Paulson decided to create a 700 billion dollar rescue plan and financial companies were saved from shorting.

I shorted Lehman at 4.00, only to see my stop loss taken out by a end of day bounce, then the company went bankrupt. Could of made a quick grand, instead took a loss. No one is to blame, I’ve learned to always set a stop loss. Why? I shorted Wachovia Bank at 14 only to see my stop loss taken out again. This time the stock would see 9, but now is at 19. Discipline is key to trading, especially in this environment.

Why should the federal government bail out shitty companies? Imagine if your company was about to fail because it made bad decisions, should they be bailed out by the fed? If you made a bad decision that left you broke, should you face the consequences or expect someone to give you money or even a loan. I understand that this is a general assumption and if AIG failed, the reprecussions would be far fetched. However, if this is a free market, why would the fed ban shorting of financials? I’m not hoping banks fail, mortgage companies go out of business and people lose their jobs. But what is so great about the stock market is that it allows ANYONE to make money at ANYTIME. Banning shorting of financials makes it a one sided coin. If your business is flawed, why can’t someone short your stock and make money off of it. Think about the flipside. Would the government ever ban buying of financial stocks if the financial sector were making too much money? That would be absurd. I agree that naked shorts should be banned, but banning shorting manipulates the market immensely, as characterized by the 30% increases in major financial companies on Friday and 100%+ increases in small bank stocks.

What this means is that once the ban is lifted. These stocks that have been pumped so ridiculously high by the federal government will definitely come down. That is almost certain, and I will try to profit off of it.

I wasnt thinking straight on Friday and realized that buying any large financial company over the weekend would be smart since Bush and company are unveiling their rescue plan which will undoubtedly send the markets higher and financials by 20% again. I hope the bounce doens’t happen before the market opens so I can get in but I doubt it.

I was going to pick up a few shares of Lehman but after hearing Henry Paulson say he wont use government to help with the acquisition I couldn’t pull the trigger. Without government backing, Leh will most likely be low balled or at take an extended time to find a suitable offer. However, I don’t really Paulson will just sit back and might just be bluffing to save the government some money. If they save BSC, why can’t they help LEH? Too bad I wont be here to see the conclusion of this because I will be in LA but if anything breaks, I’m willing to dump a little bit of capital into a hunch.

I have been following an awesome site that gives quality data about Chinese companies, especially ones listed in America. The site is China Analyst.

I am across an informative post showing the amount of short interest in Chinese stocks. Below are the top 25, for the other 75, visit the site above.

Using capital one card is much more better tax wise than any other credit card. According to the latest quantitative finance research, another card that does care for the consumer is mastercard. Even the citicard is trying to be there.
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Mutual funds are usually recommended to those who don’t have time to do not have the knowledge to choose their own investments. Below is a compilation of how fidelity, the world’s largest fund has done over the course of the year.

Unfortunately for Fidelity, they are the 4th largest shareholder of Fannie Mae and 12th largest holder of Freddie Mac. Fidelity also made the error of reloading on these two companies in the 1st quarter because they appeared to be at historically discounted prices. The fund owned 47 million shares by the end of the first quarter. The prices of Fannie Mae have fallen from 40 to rougly 13 and 34 to 10 for Freddie.

I understand how this explains the perforamnce of the domestic equities and financial services but why is the energy sector down. Energy commodities have seen their values rise steadily throughout the year with higher gas prices, solar plays, and other alternative energy.

Overall, fixed-income, not surprisingly is doing the best, which isn’t any better than holding cash at this time.