Short Financials (particularly, SEF)

Been thinking of shorting financials on a bounce if Monday rallies or at the open if we see more weakness with a timeframe of a couple months.

  1. Right now my portfolio is 100% long, so would serve as a partial hedge.

  2. Financials have been one of the weakest sectors for a long time now. They're probably one of the biggest laggards relative to the S&P.

  3. Banks are being hammered by the economic slowdown and uncertainty. Look at Goldman's last report to see that many banks' trading operations are falling apart. Not to mention that so many banks are bleeding talent right now with the hiring freeze, layoffs, and many fleeing to safer pastures.

  4. Banks are acting like its pre-2007. "We don't need capital." "Our balance sheet is fine." Well yea, your balance sheet is fine because you are overstating your assets and understating your liabilities. In the case of an economic slowdown, this will blow you up. Hence BAC is scrambling and the market is penalizing many others.

  5. New wave of government lawsuits looking to demonize the banks. Freddie and Fannie want huge amounts of money back, will probably lead to more lawsuits.

  6. Fed asks BAC for emergency plan. Certainly doesn't help confidence in the banks.

 

The Illuminati have deigned the markets be closed Monday in order to perform an augury that will require the heads of all the major banks to attend.

“...all truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.” - Schopenhauer
 

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