you have to diversify. You can't put all the chips in a volatile stock like C when you are so risk averse.
First, I know I make a big mistake of holding 45% of my portfolio in Citi. I am now trying to do my best to minimum the cost of my mistakes. No I am not thinking about making my money back quickly, I am only thinking of preserving my capital, and not losing another 20% or more. When I purchased Citi, I thought it was in the bottom under goverment's injection plan. I intended to leave it as a long term investment. But now I don't have that confidence that Citi can be a long term hold. We don't know exactly in what way the government would be involved in the shaky Citi. I can't bear the risk that Citi may slide to $6, not mention that it may have the same fate as Fnm or AIG. It a typo, I mean "sell covered call" instead of "buy covered call". My mistakes. However, sell either covered call or put against Citi is not a strategy if you can't bear the risk of owning Citi for either short or long term. If I am not a long term investor, I can just sell off Citi, take the loss and walk away when I see a rebound next week. If I don't buy back other more comfortable sectors, I would be a real loser if this is really a bottom for the long run. Switching to tabacco sector PM and MO is taking the step of reducing risk. They may still go down in case this is not the market bottom. However, the risk of % down is far less than Citi. The discipline way is just swithing to BAC, not to PM or MO, if I can convienced that BAC is OK to be a long term hold. I just know many good people in ET recently. Any comments will be highly appreciated.
No? So you are thinking of doing this in order to cut your losses and preserve capital?? Sounds like a short-term strategy, a way to make some money back quickly. You don't say you are going to do this with 3% of your account. I assume you're going to do it with the proceeds of a potential sale of C. I do hope you know that I am not trying to make you feel bad or to publicly mock you. I am genuinely trying to point out that what you are writing indicates (to me at least) that you are still having some issues with how to play these markets. If you will notice, you said two different things about your intentions with BAC. First you say you will buy BAC and hope for a rebound and sell. Then you talk about switching to BAC as a long term hold. I don't really understand what you mean here. You would have to be more specific about the way in which you intend to play these stocks now, before I could be convinced that switching into them represents a 'reduction in risk'. Shifting 45% of your account equity into these stocks now is not significantly reducing your risk. Please be careful going forward. I know that you will never again make the mistake of putting 45% of your entire account equity in one stock. Good luck to you.
Citigroup is a buy at $5 according to Jim Rogers. http://articles.moneycentral.msn.com/Investing/SuperModels/StockMarketWinterIsMovingIn.aspx?page=2
Go long the Idiot Proshares Index - Ticker Symbol IDO. The Idiot index is a long 2X leveraged fund which tracks the S&P Dummy Futures.
sell half your position and do whatever you want with the other half.If it goes to 22 you break even...anything can happen in this market...banks are flying all over the place from day to day.Its impossible to get a solid feel for the direction of the market.The only thing i can see is that this market is establishing a range of 8000-9000 on the dow.And it is making that range in a short time period.So much volatility. I think the one crazy thing about what you said is you are thinking of buying LVS. This is a hail mary pick.LVS is in deep shit and is probably going to zero.Stick to safer stuff like dow stocks if you have to play stocks and you are concerned about capital preservation.
This is what I am afraid of. First, I won't sell in this market low if I owned BAC instead of Citi. I will still sell BAC in the next one or two rally, as I am convinced that bank stocks have long way to go down before recovered. However, I won't sell BAC if it is keeping going down next week. This is the reason that I am thinking swapping Citi with Bac on Monday no matter what market is, and wait for the rebound and sell BAC. I have more confidence in BAC than in Citi. Although the percentage rebound of Bac is likely less than that of Citi, I am willing to take it. Citi is in a very shaky situation, and many brokerages downgrade it to sell. I seem uable to wait for the rebound and sell. I am thinking what to do to minimize the loss of my mistakes of owning Citi. If I can be convinced that Citi won't go down more than 20% I won't sell next week unless it rebounds. What I am afraid of is that it can go down another 50% anytime soon. What you experienced investor/trader would do if you need to dispose Citi in a week in current market condition - extremly volatile and no direction at all. Thanks.
You're afraid that Jim Rogers declared C a 'buy at $5', and that's why you don't want to sell now? Did you even read that article? I know you didn't because the link posted there does not represent an actual Jim Rogers recommendation to buy C at $5. The guy who posted that link is the one who said that Rogers calls C a buy at $5. What he actually says is C is bankrupt and will suffer for years, arrive at $5, and then it will take years for it to get back to your buy levels. "Technically, it's bankrupt, with gigantic off-balance-sheet derivatives positions whose value it cannot possibly know," he says. Though he believes some large banks can and will go under in the next year or two under the weight of billions of dollars worth of bad loans and blown-up derivatives positions, he doubts the government will allow Citi or Fannie to fail. "They'll nationalize them in some way. It's wrong, but they can't let the two largest lenders in the nation go down. They're making a big mistake; these banks have many more problems still ahead. They should wait until these companies are really on the ropes a few years from now . . . and trading at $5 a share." Exactly.
I am in a similar situation, I have over 5000 shares of C in my portfolio, its half the total value. Average price is $16.00. I just saw on CNBC that GS may buy Citi.... if this happens will the value of C go up (I doubt the shareholders will approve at less than $16 - $18 given the value in the past 2 months). Or should I just sell and take the bath on the loss?
Take the loss and diversify. Ask yourself , Can you handle waking up and C is trading at $7. If not, sell Monday and move on.