Banking, finance, and taxes
Goldman Sachs Bets Against Risky Financials (WM, MER, LEH, WB, NCC, FRE, FNM)
Published:
This morning we have another negative note out of Goldman Sachs calling for investors to be long volatility in financial stocks where the options prices are reasonable in companies that have exposure to troublesome assets like subprime CDO’s, subprime RMBS, exotic mortgages, commercial real estate loans, Alt-A, and leveraged loans.
Some of the stocks noted were as follows:
Goldman Sachs expects these names with more exposure to be volatile as future write-downs should correlate with total exposure. The firm recommends buying put options and "put spreads" to position yourself for downside in the sector and these specific names. The firm is expecting more negative news in the coming months.
If you want a brief description of a put spread, we put in a link here from Investopedia.
We would note that we also expect more negative headlines for the sector as yet another wave of troubles is coming via resets and defaults in Option-ARM loans. But we’d also like to note that the worst has already been seen in "some" of the stocks. There will likely be some more failures that go into bank failures rather than mere mortgage lender failures.
Jon C. Ogg
February 29, 2008
If you’re like many Americans and keep your money ‘safe’ in a checking or savings account, think again. The average yield on a savings account is a paltry .4% today, and inflation is much higher. Checking accounts are even worse.
Every day you don’t move to a high-yield savings account that beats inflation, you lose more and more value.
But there is good news. To win qualified customers, some accounts are paying 9-10x this national average. That’s an incredible way to keep your money safe, and get paid at the same time. Our top pick for high yield savings accounts includes other one time cash bonuses, and is FDIC insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes and your money could be working for you.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.