Warren Buffet, George Soros, Eddie Lampert, Carl Ichan, Wilbur Ross...
All stepping into the abyss and they're buying. And
what are they buying?
Financials.
Those who ignored risk and used reckless leverage are
being taken out and shot... as they should.
-- No trial.
-- No last words.
-- Just the firing squad.
The key here is to not confuse Lampert, Ross, Buffet,
Ichan and Soros with Boesky, Milken and their present
day counter-parts.
One group created the uber-levered, risk-blind, debt-bombs.
And the other made their bones by stepping into the after-
math of the implosion and picking up assets on the cheap.
Risk is being re-introduced via fear, panic and the
resulting forced selling and liquidation.
Make no mistake about it -- the bathwater needed to be
changed.
The market was out of control. Risk was being ignored.
Leverage had reached all-time highs. And valuation models
on illiquid derivative vehicles were not based in reality.
Well reality has been re-introduced.
This has been a great time to be short...and in many
cases to still be short. But, not everything.
There's an old saying that applies here:
"One man's trash...can be another man's treasure."
You definitely want to be short the Boesky-Milken-esque
"trash"...but, I don't think you want to be short the
Lampert-Ross-Buffet-Ichan-Soros "treasures".
Knowing the difference -- is going to make those who
are willing to wade into the darkness, a lot of money.
A helluva lot of money.
The smartest way to fade your shorts is by buying into
great companies during panic and forced selling.
I think Goldman Sachs is unquestionably one of those
great companies. A must own and one of the stocks you
need to be establishing a position in here.
A good ole fashioned 10% correction in the Dow was
long over due.
And a correction in the balance between risk:reward
was also due.
Where the money will be made - is in buying stocks that
have been significantly oversold in excess to the market
on the downside and who will significantly outperform it
on the upside.
I'm still short 3:1 of what I'm long and I'm fading out
a lot of my shorts here...but, I'm also not hesitating on
trading into and out of the bottom and coming out long
some deeply discounted gems.
Gold and precious metals are weak here and surprise,
surprise; failed again to serve as a flight to safety.
Instead - the US Dollar had bounced and the
icons and the Ichans -- are steppping in and
buying great companies whose stocks have been
oversold relative their businesses.
There is another incredible transfer of wealth
underway here. Nothing off script. The way is now
being cleared for the Fed to cut rates and pump
up a pre-election economy and market.
You place your bets... you spin the wheel.
More tonight,
SOTB
And PS:
I begrude no bruised and battered permabug from
hystrionic vitriole here... I mean, turnabout is
fair play after all. One who is willing to dish it
out...also must be willing to take it.
But, C'mon guys...
You got more game than this - don't you?
I began talking about GS at $182-$184 on August 1st.
Goldman's trading range to the $198 high gave us $14-$16
on the upside. And the low here of $169 has given us $13
to $15 on the downside.
What more could a trader wish for?
Let's put this in proper perspective:
Drop a zero off the numbers. What we then
have is a $18.40 stock that popped as high
as $19.80 and is now selling for $16.90.
Whooptydoo!
That into a cataclysmic market meltdown.
Now in case any of you are confused here. I want to
establish a position into GS. I want it to come into
me. I want it to sell off. I want to get double digit
premiums via selling puts to buy this weakness. And
I love those little $23 pops to unload calls, or stock
as I trade into establishing a position.
Learn from Wilbur Ross:
He was short American Home for 6 mos. before stepping in
long here and he's now supplying the debtor in possession
financing.
Learn from Warren Buffet:
He dumped H&R Block who bought suprime monster Option
One ...and now he's buying Bank of America here.
Learn from Eddie Lampert:
He just bought another 15 million shares of Citigroup.
Seeing a pattern yet?
I've been pounding the table on shorting the slime of
subprime for over a year. Subprime meltdown been berry,
berry good to me.
You don't need to listen to anything I have to say. But
you just may want to pay attention to what Buffet, Ross,
Lampert, Soros and Ichan are doing.
More later.
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