Almost two months have passed since I posted Serious Money: Tempting fate with 10 financials - the results of buying into the following pool of financial stocks at a time when the "hate 'em" factor was at a peak, or so I thought. Now things are even worse, much worse, and a new market bottom was reached only last week.
Trying to predict where this market will go is not possible, but there are many ways to play it. I chose to buy into a pool of financial stocks, believing the survivors would post gains that would overshadow the losers.
When I last updated this story, the pool of stocks was up 26%. Things have gotten worse, but the group is still up 13.89% plus the dividends. This is better than any of the indices, although it is much more speculative.
There was plenty of big news since the last report. While Lehman Brothers Holdings (OTC: LEHMQ) went bankrupt, MBIA Inc (NYSE: MBI) made up for it by more than doubling. Meanwhile, Merrill Lynch (NYSE: MER) is in survival mode supported by a Bank of America (NYSE: BAC) buyout offer. Seven stocks are up, two are down and one is gone (returns from July 29 prices):
- Citigroup Inc. (NYSE: C) -- $18.45 down 63% from its 52 week high of $49.90; closed Friday at $20.25, up 9.76%
- Lehman Br Holdings (NYSE: LEH) -- $16.88 down 75% from its 52 week high of $67.73; down 100% (in bankruptcy)
- Merrill Lynch (NYSE: MER) -- $26.25 down 67% from its 52 week high of $79.72; closed Friday at $29.50, up 12.38%. (Being acquired by Bank of America (NYSE: BAC).
- MBIA Inc (NYSE: MBI) -- $4.92 down 93% from its 52 week high of $68.98; closed Friday at $12.88, UP 162%.
- E*TRADE (NASDAQ: ETFC) -- $3.06 down 84% from its 52 week high of $19.39; closed Friday at $3.91, UP 6.2%.
- East West Bancorp (NASDAQ: EWBC) -- $12.46 down 67% from its 52 week high of $30.42; closed Friday at $17.65, UP 43%.
- Gramercy Capital (NYSE: GKK) -- $6.72 down 77% from its 52 week high of $29.45; closed Friday at $5.20, down 22.62%.
- Newcastle Investment (NYSE: NCT) -- $5.88 down 72% from its 52 week high of $20.88; closed Friday at $6.63, UP 12.76%.
- Wachovia Corp. (NYSE: WB) -- $15.70 down 70% from its 52 week high of $53.10; closed Friday at $18.75, UP 19.43%.
- Washington Mutual (NYSE: WM) -- $4.43 down 89% from its 52 week high of $39.48; closed Friday at $4.25, down 4.06%
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of MBI, NCT & WM.
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