Today the markets were up and up big. The DOW gained 212 points with the financials leading the way. It’s amazing that they are doing has good as they are with all the write-downs that they’ve been doing for the last year. It seems that the financial are still expected to continue their losses for a couple of more quarters.
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I mentioned the other day that I have been looking to jump into the financials (which is something I don’t do often), but that I had to do quite a bit of research before it would be done. I’ve thought about Fannie Mae and Freddie Mac, but with further investigations I’m not too comfortable with them. There’s a lot of talk that the two of them might not make it. I don’t believe that that will happen, I mean how could the government sponsored mortgage firms not survive? Yes, I did buy into them last month when the rumor went around about the Feds throwing them a lifeline. Stayed in it for 3-1/2 days and got out with a 42% gain.
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What I did decided on doing after my research was that I bought into Lehman Brothers. My cost basis at the moment is $14.50 and the stock already at the end of today’s trading was $15.87. That’s a gain of 9.5%. Lehman is so undervalued and in the long term (6-9 months) I expect the stock to be well over $20. In my opinion (whatever that’s worth), is that it’s been oversold and soon the investors will be back in it in no time.
The other financial stock that I’ve been waiting to come down was Goldman Sachs. My target was any where under $160 and I wanted to really see $150. Once it dropped below $155 I knew that it was time for my first buy-in. My cost basis is $155 and it had a good day closing at $161.47, a gain of 4.5%. I do expect these stocks to be jumping up and down, so if you do expect to get into these companies, wait for the next dip and go for it.
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I’ve said it before and I’ll say it again, you need to do your research and due diligence before getting into any investment. What may be good for me, may not be good for you.
Tags: Financials, Investments
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