My observation is that the financial stocks are still to highly unpredictable to be in a position for a long time either short or long at this point. So much swings at the whim of hearsay and rumors.
Just take for example at BAC and others. Within two months we’ve seen a movement from the mid thirties all the way down to $18 and all the way back up to the thirties where it stands right now.
This will probably continue. Complicated by this is the issue that it seems like the Fed likes to willy nillie step in and out when it feels like it needs to. For instance, the temporary restriction on naked short selling imposed only on financial stocks and the subsequent expiration of that rule (yesterday).
If that’s not disturbing to one, I don’t know what is. Too many people have their hand in the cookie jar.
Disclaimer, I’m generally gambling (and yes I consider this gambling) on BAC and C by having a few shares long-long, and in addition been in and out of BAC and C when there trying to time some of the swings by when there is a $1-$2 difference in price, coupled with writing some in-the-money covered calls hoping they will expire worthless. Aside from having a nightmare tax reporting situation next year (currently at 54+ trades on BAC alone), I’m not sure if this “experiment” is really going to be better than sticking things in a index fund for the long run. If it does turn out to work for me, it would definitely be all luck and no skill.
