Who's getting short BofA?
I am seriously considering it (at $5.90). Any thoughts?
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I am. I think it's going to bottom out around $4.
I've posted on BAC before when someone suggested buying it. I was vehemently against that idea.
I'm equally vehement about not shorting BAC. There is a huge informational gap that the public really cannot bridge. Nobody really knows how their millions and millions of loans are performing. Nobody knows their actual exposure to a sovereign debt crisis. Most importantly, nobody knows how the government will intervene in the case of a major crisis.
Buffet announced his stake in BAC shortly after meeting with Obama to discuss "job creation." I am a bit of conspiracy theorist, but have a hard time believing Bank of America didn't come up in that discussion. My guess is that there was almost some kind of implicit guarantee that BAC isn't going down. Buffet may be getting old and his political forays are frustrating, but he is still a brilliant investor. I doubt he would commit $5bn of capital, even on such favorable terms, without a strong sense he was going to recoup his capital.
Stay away from this one. There are plenty of financials that are small enough, and more likely to fail. they make great short candidates. There are a small number of financial institutions that are relatively insulated and could outperform greatly. Play either side of those rather than rolling the dice on BAC.
Well said Gray Fox. BAC isn't going anywhere with a balance sheet of $1.5Trillion. That's 2.5x larger than Lehman. If you think they have the potential to collapse, you should probably go stock up on survival supplies and buy a gun because the world is going down the shitter.
If you are wanting to jump in and out of this trade, the downside isn't looking as attractive as going short-term long. It would be a 13% movement to the lows from last week, but the market is really beating the crap out of a dead horse. I don't think it's going to revisit those lows without someone taking them to court or Europe soiling their Depends. I'd say all financials are going to continue to try and move up the floor price of their lows in the coming weeks.
shorting at bac right now is scary...would you short one of the biggest bank AND it's all the way down to ~$6 already. I would do it when it was back at 20, not now
I bought it in late 2010 when it was just below $11 after the robosigning stuff broke, and sold at around $15 in February-ish. Obviously it would have been great to turn around and short it at $15 and cover now, 20/20 hindsight though.
I wouldn't short it now. It can't go much lower. The company would never be allowed to go bankrupt as that would cause a shitstorm worse than taking a hot iron rod to a 70 year old man's hemorrhoid. I think it will bounce around in the $6-$8 range until there's real clarity about Europe and more positive indications about the US economy.
Technically speaking, it is a decent time to short (currently trading at 6.20) though you would have to cover somewhere around 5.29 and possibly set your stop at 6.36.
It will be interesting to see how the financials close for the day. Volume is extremely light, and almost every day the banks have held gains throughout the session the gains fade quickly. It's a coin flip how tomorrows trading session goes.
A lot of hopium in this thread
It is too late to short BofA. Just missed the train by 6months with my perfect 20/20 hindsight. Of course, it could go back to feb 20th '09 @ 3.79... but my balls are not made of steel. The way I see it; Limited downside and unlimited upside on this stock... translated in to shorting: You are in a pile of shit if you short.
A company with 221.7bn in equities (as of 6/2011) means it have ~21.9 USD underlying per share.
This stock traslates to the ugly bitches that hang around bars/nightclubs just before last call that needs a place to crash before she heads back home to Jersey. Might be fun to let it 'go down', but you'll be in a world of hurt if you don't protect yourself.
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