Wednesday, August 24, 2011
Wells Fargo - 2%
Although I have yet to finish going through everything I owned (at the point of starting this blog), I would be remiss if I did not comment on the ridiculousness of the last couple of weeks. After the dust cleared, I find myself down about 9%. Now, during the last "crisis", I accumulated as much as I could. After dropping over 1000 points in recent days due to, among other thing, the "Obama" downgrade (pissing 5 trillion dollars of borrowed money down the toilet while simultaneously killing any chance of growth is responsible more than anything for our country's first downgrade in its history). I know, part of that 5 trillion dollars of borrowed money was a down payment on our transformation to the "Green Economy" - and notice all the "Green Stocks" I own, making money hand over foot on wind farms - and the rest was spent on an ingenious plan to maintain the "Permament Democratic Majority", or, in other words, buy votes in swing districts. However, a lot of that loss is due to the very real sovereign debt problem of Europe, although, rest assured, a famous Nobel prize winning economist assures us the social democracy of Europe is running like a charm (they just give those things away to any brain dead moron, don't they).
Anyway, I digress ... with the very real sovereign debt problems in Europe slowing down any global economic expansion, Financials and Energy stocks took big big hits. Since one should "Buy low", looking for long positions in financials and energy may be advised. Now, in my opinion, you need to be real long in financials to make that a buy as its going to get a whole lot worse before it gets better, but energy stocks might be the way to go. My own holding of Walter took it hugely on the chin making me regret the stop order I canceled, but even Walter has gone back up over 7% since its precipitous drop 2 weeks ago. One thing I did NOT do was "sell to stop the bleeding". One thing to be noted though, is that our anemic 0.4% growth last quarter contributed to the big recent losses. Predicting these slow quartesr (or dare I say it, contractions) beforehand may be a signal to sell, then jump back in after the dust clears.
Now, back to our regularly scheduled program and the next stock I own in the wild and wooly world of ... Financials. I do own Wells Fargo and feel extremely fortunate that I dumped my Bank of America and Citibank months ago (BAC at $13 - it now trades near $6 and C at $40, it now trades near $25). I traded in those dogs for this one for one fairly simple reason ... piggyback investing! There is no shame in piggyback investing and in the last two years I have hitched my horse to the Oracle of Omaha himself, Warren Buffet with, excepting this one, very good success. In the last 2 years I've bought and sold with Mr. Buffet, CarMax, NRG, and Nalco. With NRG, I learned two valuable lessons. First, NRG skyrocketed when Exelon wanted to buy them out. NRG resisted believing they were worth even more than their offer. I trusted that assessment and watched the buyout fail and the stock plummet. Lesson learned, a buyout offer comes, sell when the stock price is inflated (see Continucare). Next lesson, Warren Buffet sold his NRG stock and again, looking at under 10 P/E ratios, I held. The stock fell. When WB dumped Nalco, I dumped it the next day, despite my fondness for it. These days, WB bought up tons of Wells Fargo, until it made up 20% of his portfolio. Wells Fargo is currently the only piggyback stock I own of Mr. Buffets as I believe he has recently lost it, becoming way to emotionally invested in his buddy Big O and clinging to the belief that he won't continue to be a failure. I also like John Paulsen for piggyback investing and recently started looking into the Auerx fund picks for future piggyback investing. For now, I'll stick long, really long with Wells Fargo.