Inaugural Blog

I created this blog to keep track of my own ideas and understanding of the stock market. As a university graduate who has studied Finance and Economics I have a very good academic understanding of what is happening in the economy and how that SHOULD affect the stock market. However, there is clearly a disconnect between academia and the reality on the trading floor.

This blog is to really distill my ideas and opinions of goings on in the financial markets, with a focus on the American financial stocks. It will provide a record to verify/disprove the calls I will make and trades I will recommend.

Today is Tuesday July 22, 2008. Wachovia posted a loss of $8.86B or $4.20 a share, exceeding the loss anticipated by analysts by $3. The shares promptly dropped 11% at open, but have since rallied more than 40% on a statement that they do not plan to issue any more equity. I feel that traders are just playing the recent positive sentiment and are pumping this stock up unduly. I would wait to see what the market does for the rest of the week, but I don't like this stock one bit and would consider shorting them after this market reaction

Apple also beat, but lowered expectations. They are down 4%, trading around $160. I feel that they are managing expectations, kind of like another industry leader, Goldman Sachs likes to do. Both firms probably do this because the Street is so used to these two firms beating expectations by a large margin, that they need to manage expectations in order to still do this. Apple did the same thing last quarter, prompting a huge sell-off. I would wait until the end of the week to see what the market's reaction is to this news, then buy on the first show of strength thereafter.

Texas Instruments missed big time. I don't like them at all, but must admit I know little about their operations.

WaMu is also posting after the close. I was planning on being short into these earnings, but lost my nerve, although I predict a bigger loss than anticipated. In light of the market's reaction to the Wachovia loss, shorting financials right now is very risky.

My positions:
Long FREAC (Freddie Mac Jan $15 Calls) - Purchased at $.65
Long BZHHA (Beazer Homes Aug $5 Calls) - Purchased at $.35