I dont claim to be all knowledgable like the many multiple duplicate aliases on elitetrader like Landis and Robbie, but I do trade real money in multiple positions for the short-mid term swing. Im not a daytrader flipping es contracts, but just a lowly equity guy who waits patiently from week to week for a good setup. So here today I post my lessons learned of buying into a panic.
As you know, I have posted many times about my bullishness of the financials. I have made many posts about buying into FNM, BAC, UYG and a few other notable names.
A few months back I read that Warren Buffet had invested himself into WFC and BAC. If Warren was invested in these stocks, then I knew that they wouldnt go out of business, but they would certainly feel a little pain in the mid-term. Notable fund managers from Fidelity were also buying in early on too which gave me confidence.
So I started monitoring the volume/price on certain stocks that the funds and Warren are invested. One that caught my eye was BAC. I knew it was going to get real low, but it wasnt going to go belly up like Indysmack.
I saw BAC downtrending, the volume reaching higher/higher and decided to start my first position around 30. As the volume increased, I suspected there would be a point where it would turn around, but where? Every 10% down, I averaged in more and more. At around 20, I doubled down with my largest position ever. Then when it took off with the 3 white soldiers I bought more. It was definately scary at 18 and the volume at 200 million as if this was the end of the world.
Now BAC hit a high of 34 today. Im happy with how this trade went and will keep buying more as the price goes up. When the price finally dips, then I will sell with an automatic trailing stop.
The fundamental of this trade is that the failure of Indymac made BAC only stronger. Who will do business now with smaller banks? I believe everyone is going to focus on larger banks such as WFC and BAC. This will easily hit and probably go past its old lifetime highs in a year or so. Why bank at Washington Mutual that appears to be a wreck when you can place your money into someplace safe like BAC?
I definately got in too high at 30. There will be a next time and I will when the volume gets higher before establishing my position.
I wouldnt do this with an ETrade or a WM that will probably go bankrupt, but with a company that I know will not fold. Warren has never placed his money into a company that has folded. I know BAC wont fold
I bet now that I will hear from the peanut gallery which consists of a few ugly guys in Wisconsin on macs with 20 duplicate aliases who will tell me what a fool I am.
As you know, I have posted many times about my bullishness of the financials. I have made many posts about buying into FNM, BAC, UYG and a few other notable names.
A few months back I read that Warren Buffet had invested himself into WFC and BAC. If Warren was invested in these stocks, then I knew that they wouldnt go out of business, but they would certainly feel a little pain in the mid-term. Notable fund managers from Fidelity were also buying in early on too which gave me confidence.
So I started monitoring the volume/price on certain stocks that the funds and Warren are invested. One that caught my eye was BAC. I knew it was going to get real low, but it wasnt going to go belly up like Indysmack.
I saw BAC downtrending, the volume reaching higher/higher and decided to start my first position around 30. As the volume increased, I suspected there would be a point where it would turn around, but where? Every 10% down, I averaged in more and more. At around 20, I doubled down with my largest position ever. Then when it took off with the 3 white soldiers I bought more. It was definately scary at 18 and the volume at 200 million as if this was the end of the world.
Now BAC hit a high of 34 today. Im happy with how this trade went and will keep buying more as the price goes up. When the price finally dips, then I will sell with an automatic trailing stop.
The fundamental of this trade is that the failure of Indymac made BAC only stronger. Who will do business now with smaller banks? I believe everyone is going to focus on larger banks such as WFC and BAC. This will easily hit and probably go past its old lifetime highs in a year or so. Why bank at Washington Mutual that appears to be a wreck when you can place your money into someplace safe like BAC?
I definately got in too high at 30. There will be a next time and I will when the volume gets higher before establishing my position.
I wouldnt do this with an ETrade or a WM that will probably go bankrupt, but with a company that I know will not fold. Warren has never placed his money into a company that has folded. I know BAC wont fold
I bet now that I will hear from the peanut gallery which consists of a few ugly guys in Wisconsin on macs with 20 duplicate aliases who will tell me what a fool I am.
