tag:blogger.com,1999:blog-2335748440449035592.post2995319819533709962..comments2008-01-31T17:14:28.890-05:00TraderMarkhttp://www.blogger.com/profile/06241756200482130281noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2335748440449035592.post-43602636517946413402008-01-31T17:14:00.000-05:002008-01-31T17:14:00.000-05:00yes if you search for capital one I have written I think it's a good short in between these rises on the "Fed will save us all" kool aid moves. I have written about the degrading US consumer credit issue since last August and how it will be the shoe to fall in 2008. I think in latter 2008 it will be very apparent.<BR/><BR/>Now what makes a good investment or not is always up for debate. One can envision a scenario where all bad news is ignored as "Fed cuts fix everything" and any blowups in credit cards can be explained away as "temporary" since "fed cuts will fix all this". Or you can say the opposite. It's really just an art. Do you do the opposite of the opposite of the trade... the market tries to discount the future so much you don't know whether bad news matters anymore at certain points. But I think the credit issuers are going to be in bad shape because I think the consumer is in far worse shape than the media and the stock market thinks. So the stocks can go up and up and up, even if you are conceptually correct. Perception is reality.TraderMarkhttp://www.blogger.com/profile/06241756200482130281noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-29903534972510938282008-01-31T15:08:00.000-05:002008-01-31T15:08:00.000-05:00Forgot to say in my last comments that I just found your blog and find the whole concept very intriguing. Congrats and keep up the good work, as you seem to have a solid grasp on things.<BR/><BR/>I too sold off some MA in fear that people would beat it down due to perceived credit risk that doesn't exist for them, or just because the market beats down everyone who reports earnings right now it seems. At any rate, I was curious as to your take on either a "pairs trade" or just shorting DFS or COF. I'm not a big fan of pairs trades because you can almost increase your risk sometimes than if you had just stuck with one position. But, I'm thinking that although consumers worldwide switch from cash to plastic transactions, that the next major "shoe to drop" in the credit market will be rising defaults on credit card payments... especially after this slowdown/recession is all over with. People will have tapped into all they can just to get by and probably can't pay off the balances. COF and DFS definitely have credit risk and so I almost want to short one of them in addition to my MA long. But, again, it makes me wonder if I'm actually adding more risk than if I had just kept a MA long that I buy on dips. Because, AXP showed us the negative reaction the street can give on any news of writedowns/setting aside cash for potential losses. At the same time, the financials as a whole tire me here just because everything is so backwards and you can never truly gauge when bad news will be considered good news and vice versa. At any rate, just wanted your take on a short COF or DFS trade in addition to the long MA. Great blog and keep up the good trades/investments, I'll definitely keep track of your progress and insights.madhatterhttp://www.blogger.com/profile/09190401467783694097noreply@blogger.com