Get ready for UYG?

Discussion in 'Stocks' started by tradestrong, Mar 3, 2008.

  1. News of small bank failures. Banks writing off huge losses due to impaired securities. No liquidity in the banking sector...

    ....on and on and on.

    But here's the fly in the ointment. Those "huge" losses being written off by banks are in many cases paper losses. Many of those write-downs will continue to perform.

    Those so-called bank "failures" are also paper losses. They will be scooped up by the bigger banks at steep discounts and be quite profitable in the long run.

    Oh...but Joe Smo trader/investor only sees the media reports of bad news. They don't understand that in many cases, what we have is accounting conservatism just in case of complete impairment of the securities owned by the banks (which is highly unlikely). These write-offs aren't actual losses and will without a doubt cause an overreaction on the part of the market values of the financial sector.

    Folks, UYG is reaching that critical point. It could be volatile and drop down into the mid 20's. I'm stocking up at these levels. I'll buy every dollar down that it goes from this point on to build up positions against the panic selling. It might take a while for it to rebound, but it will be an easy play I believe.
  2. l2tradr


    Picked up 2K shares today. Looking to sell at 32.50 or so, stop at 26.98, 2:1 reward/risk on this trade.
  3. Bowgett


    UYG is not for my stomach. I bought KRE yesterday.
  4. l2tradr


    The reason I went with UYG is because it hit Jan lows, closed above, and I'm looking for a bounce. Of course, I could be wrong :p
  5. Bowgett


    Some reasons I went with KRE are

    Yeilds 5.82%
    Average Price/Earnings 12.31
    Average Price/Book 1.27
  6. l2tradr


    How long do you expected to hold it? I'm only looking for a one week MAX swing, maybe a bit longer if it holds above resistance.
  7. Bowgett


    2-3 years :) I guess a little longer than one week.
  8. l2tradr


    That's a little different then :)
  9. S2007S


    UYG is certainly a great pick if you have patience, I see it trading 100-200% higher from fridays close over the next 2 years. Forget buying the individual stock in this sector, by the group with either XLF or UYG.