GE for GS?
When there is turmoil like in the past few weeks, I like to look at my portfolio and readjust to best profit from the changing landscape. The US gov't has shown that they will not let the financials fail, so I think we have seen the bottom of this crisis. Of the 4 stocks we currently own. I am suggesting we sell GE; it is the most defensive of the names we own and stands to gain the least going forward. I think the others (LLL, SLB, DE) have some merit in this market recovery.
I am suggesting sell GE at $26.60 and buy 20 shares of GS at around $124. Due to the rapid nature of the market conditions, please try to weigh in quickly.
posted by Junk Bonds @ 9/22/2008 01:59:00 PM
4 Comments:
I just read your post and see that the headline article on Google Finance tonight is this:
http://www.reuters.com/article/ousiv/idUSN2233386620080922
entitled "Is it time to buy Morgan Stanley and Goldman?"
The other irony is that today the SEC has included GE among 28 other stocks that now cannot be shorted (another one is GM). It seems like the Treasury umbrella is now also sheltering at least two other major American finance companies!
I don't have a problem with selling GE to raise cash towards this play on the $US banking sector. I know I've been putting a plug in for GS recently but I don't know much about the company than what I've read recently. But with the firm backing of the USSA, who needs due diligence. We all know what profits can be made with cheap access to capital.
I think the risk is that M&A, and private equity type deals that GS thrives on will slow severely in the future, but when you're the biggest and the best known, perhaps the risk/reward is still looking good. GS hasn't been this cheap in years.
You have my vote to get in below $130 or so. It closed today at $121.
Actually this issue of The Economist has listed 5 reasons why it may be a good time to invest.
http://www.economist.com/finance/displaystory.cfm?story_id=12274062
I am not really convinced that we can really count on the recovery yet, but I believe in the long term (one or two years from now) GS has much larger upside than GE.
So you have my vote too!
Shit! GS is up $10 after hours because Buffet is buying $5Bil worth of GS. I didn't make the GE for GS trade today because GE was down on a downgrade by one of those infallible brokers. That usually passes in a day or two so I thought I'd wait it out. Unfortunately, Buffet somehow got word that Fulton Associates was planning to invest in GS, and decided to get in before us.
Let's see how those stocks trade on Wed, we may have to buy MS or XLF.
How do we get to trade in the after hours market? These insiders always get the best of it including Buffet!
Getting Buffet on board is like getting a double injection of capital. Do you really think it's late to jump on this thing. Weren't we in it for at least a 50% upside anyways?
Congress seems to be putting up some roadblocks and Senator Shelby from Alabama might just block quick passage of the bill. This may just create enough uncertainty in the next few days/weeks to cause a further pullback in financials.
I'm quite disappointed in GE. Their black box financial unit has really dragged them down. Sell it on any uptick is what I say!
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