Both Doug Kass and Helene Meisler at RealMoney.com have been calling for a bottom in banking stocks, and betting in particular on Citigroup. They are getting crushed. Kass thinks bloggers are proving him right.
Kass wrote today:
“My inbox is filled with blogs that are saying how stupid I am to reverse on the financials.”
Well, Mr. Kass, this blogger right here is short banks and taking your money!
“…the hatred of the financials is so deep it needs to be washed away”
I don’t hate the financials. I love them! They have been so effective at sucking in people like Kass and Meisler that it set up a fantastic shorting opportunity.
Both Kass and Meisler have violated a basic rule of investing: they have failed to take into consideration the sector in which their stock resides. Citigroup is in the banking sector, and that sector (the BKX) has now taken out the November 2002 low, and is rapidly closing in on the October 2002 low, just as I predicted.
I use sentiment in my decision-making just like Meisler and Kass. However, it is only one variable. No amount negative blogger sentiment will cause the smoking crater of housing to go away, or cause the banks to return the hundreds of billions that they have borrowed from the Fed with a note to Bernanke saying: “Thanks Ben! We don’t need these treasuries anymore! The Solvency Fairy visited us last night!”
OK, now I will lecture Cramer…
Cramer wrote a piece today titled: “Don’t Try to Fight This Strange Tech Trade“:
“The out-of-oil-into-tech trade remains the strangest knee-jerk trade I have comes across in years”
Up until this week, on days when oil was down, money would rotate into the financial stocks causing massive rallies in that sector. No more. The financials have been left for dead. Tech is now the last refuge, which is a bit scary when you consider that the summer tech-selling season is almost here, and it was SandDisk that put the fork in this bear-market rally back on May 19th.
(Note to Kass and Meisler: These freshly-printed financial shares are meant only to be dumped on clueless foreigners (Sovereign Wealth
Fools Funds.) Locals like you aren’t supposed to get duped! Here’s how it works: Lehman announces a big new issue, Paulson flies to the Middle East to peddle it, Lehman goes out of business, and presto! we get back $4 billion of our oil money! Get with the program!)