‘Clearly, we need the two main banks to be strong and to continue but we have to look at the rest of the sector and see what is the configuration of banking that this economy needs going forward,’ Hurley told a news conference.

Earlier on Tuesday, Hurley said the establishment of Ireland’s bad bank project would raise the prospect of consolidation in the financial sector.

via Ireland may reconfigure all but 2 top banks-c.bank – Forbes.com.

First, pay attention when trading.

Second, stop fighting what you believe to be true

This isn’t the first time I have mentioned how important it is to have your head in the game when trading.  Not all trading software is dummy proof and you can make mistakes if you aren’t careful.  I was a bit fatigued today and decided to make a relatively small long term investment in a stock trading around $147 per share.  When trading, I get used to shares that are in a certain price range.  Determining the number of shares to buy or sell for a trade is generally in the hundreds or thousands of shares.  For example, a trade in MTB, GLW, or CELG would be in hudreds of shares.  A trade in shares of Citi (C) or AIB would be in thousands.

It isn’t often that I am trading something that is north of $100 per share.  Today was no exception.  I was INVESTING!  I decided to open a position in shares trading around $147.  I had a trade in my head as I was making this purchase and placed my order for 250 shares rather than 25 shares.  Due to my setup, I don’t get a total trading cost confirmation from my software until the trade goes off.  I had intended to purchase about $3600 worth of shares only to find I made a purchase of $36,000 worth of shares.  Oops!   Big oops.

I was in a position that has bitten me in the past.  Not one where I made a large trade by mistake, but one where I held onto something when I didn’t like the risk reward.  At the point the trade went off, I felt that there was possibly another $0.50 upside in the stock for the day.  I felt the downside probably carried about $2.00-3.00.  That kind of risk/reward didn’t suit me and I got rid of the excess shares within about 15 minutes of my trade.  Within about 2 hours, I was missing out on a gain of about $700.

The investment that I describe above was in shares of Goldman Sachs.

In earlier articles I mentioned how Goldman Sachs is at the center of it all.  Well, rather than continuing to fight (on whatever ground I was fighting) I decided to pick up some Goldman shares as a long term investment.  If I believe what I read, write, and discuss, Goldman will find a way to make money regardless of what the economy does or what the markets do.  They are a huge part of the market.  In some cases, they put themselves in the position to be the tail that wags the dog.

• Is there a bubble? Goldman will short it and cause the fall…
• Are things oversold?  Goldman will buy in with great entry points helped, in part, by their own research and trading action and participate in the upside movement.
• Is oil trading on supply and demand of the oil, or of the instrument that is used to trade the oil?  Doesn’t matter… Goldman will work it to their advantage.
• Compensation an issue with firms that took TARP money.  Easy one.  Pay it back and bring in the warrants at great prices.  Ahhhh.. it is good to have friends in high places.

Goldman Sachs

What will Goldman do with the riches that they will generate?  Well, for one, I now hope that their shares fly high.  However, I would imagine that their are some other classes of shares that participate in some rather sweet dividends.  I suppose that I could look that up, but I wouldn’t be allowed in the club anyway.  Goldman common is good enough for me.

AIB cracked above $7.00 a share two weeks ago. I am looking for a quick profit on this one to make up for some recent losses. The rising tide of the market today is helping today. We’ll see if the fed comments, a bit later, will help or hurt the banks.

AIB Allied Irish Bank

Bob

There are many rules when it comes to trading.  One big one that I like to follow is

Don’t turn a trade into an investment and don’t turn an investment into a trade

Well… I broke my rule  a few days ago.  I had 1000 shares in AIB and planned to hold it for the long term.  My cost basis was around $3.45 and I like the assets that the bank has.  Well, while paying attention to short term news, I decided that a 40%+ gain was great and traded out of my position.

At this point AIB is at $6.87 and I am sick over not owning shares.  Remember, I traded out 3 days ago at $5.34.  I HATE MISSING A GAIN!!

My mistake in this case was that I took in all the short term news as if this position was a trade and I acted on that information.  Big mistake.  When you hold an ‘investment’ leave it at that.  If any news will not impact your shares over your long term time horizon, ignore it!  Because I took in some short term news on AIB and bailed (with a nice gain) I left more than $1,500 on the table.

Once again (this is for me, not you) “Don’t turn an investment into a trade and don’t turn a trade into an investment”

Bob and Scott discuss the impact of high oil and the possible manipulation in the market.  They also discuss the prospects and history of Citicorp and AIB.

They also discuss the real estate market in the Buffalo area and wonder if that is possibly an indication of things to reach other markets.

Episode 19 - Oil is crushing

AIB week of 5/29/2009

If you read this site, or listen to our podcast, you will have heard us making the case for AIB in the past.  Even when I attempted to short the 25% move on Wednesday, I started my post with “I still love AIB”.  I attempted to make a trade on a pullback off the day highs.  I took a loss on the trade and realized that playing AIB is tough right here.  Why fight the tape?

The strongest point for AIB, in my opinion, is that they own about 24% of MTB. MTB is in my back yard and has always been a solid, conservative bank (with a nice dividend).  Up until recently, the value of AIB was below their holdings in MTB.  There is also a polish bank that AIB owns a large stake in.

Looking at this action, I have to wonder what is moving the shares in AIB?  They were just put on ratings watch with Moody’s and the Irish economy is in rough shape.  Getting the share price over $5.00 could mean that some institutional buyers and funds could now be in the mix.  That would help from the demand perspective alone.

This is one to watch.

They also discuss Celgene and the 4/15 call that Celgene is a bargain.

Scott discusses his love of TRF and the incredible gain that he has seen in the shares.

I bought some puts while the stock was up about 25% yesterday.  I felt the move was way overblown and was likely due to some buying action that forced the hand of the shorts.

Well, I gave up on my small put option trade a few minutes ago.  It is already looking like a mistake, but I am not so sure.  We might be up for a run about $5.60 today.  This thing was at $0.72 on 3/5/09.   It was at $2.74 as recently as 5/18/09.  Too far, too fast in my opinion.

I sold my puts ithe morning panic.  I mean, my morning panic.  I mean, the morning run up.  In any event, I don’t feel good about it.  I was afraid that this would continue to run and it appears I have already cost myself about $100 by making the silling early morning trade.  Folks don’t do that.  As I reflect during the writing of this post, it is more clear to me that this is settling in and would have allowed for an orderly exit of my contracts mid-morning today.  You can view my sad little losing trade in my trading log.

Have to set my goal and stick with it.  The fact that they were  option contracts with 17 days left in them made me bolt.

AIB Allied Irish Bank

Scott and I had a chat regarding AIB as it was making a push through $5.00 a share. Listen below.

The stock has run up a huge amount today.  I am not sure what the news is.  This is an ADR, so there generally isn’t a lot out there.

What I do know is that 25% in a day for any real company is a bit too much, too quickly.  Especially if that follows a 100% gain in the past 4-5 weeks.

I just bought some put options on AIB with a strike price of $5 and an expiration in June (6/20).  The options closed yesterday at $1.50 per contract.  I like the run in AIB, but I would also expect a lot of profit taking with a 25% gain.  UNLESS there is big news in the offing.  You never know.  Isn’t that always the case?  You’ll see the trade in my “trading log”.

AIB Allied Irish Bank

My attempt at discipline may have cost me.  However, when I set down my 20/20 hindsight, I know that I was only looking to get $3.58 out of my shares.  It would have missed that limit order yesterday and caught the gap up today.  That didn’t make me feel any better.

Oh well.  My replacement trade of MTB might pay off today.  Certainly not to the tune of 15%, but it should still be a good 1 day trade.

AIB Allied Irish Bank