I would recommend the following three stocks to virtually any investor:

1. CELG (Celgene):  This stock might be the one with the highest opportunity to pop.  The Obama health plan is a bit of a drag for this sector, but once things shake out there, the stock is poised to perform well. In fact, we were strong on CELG below $39 on 4/15/2009.
2. GLW (Corning): Corning is solid, good financials, and in the position to profit from a growing economy.
3. MTB (M&T Bank): Some exposure to the financial segment is not a bad thing.  You could do this via an ETF (such as XLF) or via a solid stock like MTB.

These stocks have been touted on this site since we started BobandScott.com.  I have owned a core number of shares in CELG & GLW for at least 5 years and have traded a bit during that time.  I have owned MTB from the mid 20′s and have added to my position on a couple of occassions (in the mid 40′s).  MTB is a solid regional player that stands to benefit with the recovery in the economy.

Bob

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.

With MTB, I was in at $45.27 and out at $46.27 (400 shares). Nothing earth shaking, but it felt good to have something react in the manner that I anticipated.

1. Out of my $MTB at $46.27. Patience paid off!about 1 hour ago from TwitterFon
2. Reversal.about 3 hours ago from web
3. Turning quick. $MTB on the way up to my sell point soon?about 3 hours ago from web
4. $MTB Looks headed down shortly. Hold or sell?? I think we have another move up later.about 3 hours ago from web
5. $MTB little battle @ $46.00about 3 hours ago from web
6. As noted. A buy of $MTB @ $45.50 would yield $0.50 – $0.60 by end of day. Who made it? I am debating sell $$. Basis is $45.27. @ $46.02 nowabout 3 hours ago from web
7. $MTB buy here. 45.50 mid-morning lull. Quick 50-60 cents by EOD?about 4 hours ago from web
8. Let’s not forget that it is quad witching day.about 5 hours ago from web
9. $MTB is in the mid-morning trough a bit early. $45.14about 5 hours ago from web
10. $MTB in a great place here. Ripe for a tradeabout 5 hours ago from web
11. I feel like the morning is giving me a chance to take positions. Gun shy.about 5 hours ago from web

MTB

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

AIB is moving up with the entire banking sector. I am sure that Warren Buffet had something to do with the positive action.

I am a little surprised at the light action on M and T Bank (MTB) this morning (up 3%, but lagging its peers). There are many who jump on the bandwagon of whatever Warren Buffet mentions and many investors might not be aware of Berkshire’s investment in MTB.

MTB does seem to get better mid-day action than some of the other players. I might make an option move once we are in the mid-morning lull.

UPDATE 11:44AM ET: Hindsight really sucks.  AIB is running fast!  Up to $2.92 (20% today!).  I was out at $2.54.   Oh well.   Don’t look back, just reset, find the pattern, and trade.

This nice article at Fortune should explain some of it:
http://money.cnn.com/2009/04/17/news/companies/reingold_mtbank.fortune/index.htm?source=yahoo_quote

The bank has been one of the most conservative you will find.  It is amazing to think that they were down to about $30 in early March.

At AIB’s current price, they are trading about even with the value of their stake in MTB.

You have got to hand it to some of the stock analysts who are out there.  I stumbled across a research recommendation on a bank stock while doing my own due dilligence.  The stock is Allied Irish Banks (AIB).  Take a look at the chart of this security and you will have a pretty accurate picture of many financial stocks.  What I want to focus on here is the stock performance before the analyst changed their recommdation and after the change.

Analysts recommendations. What did that cost you?

Click on the image above to get a good look at the performance during the analysts “Buy” period and then the performance following their “Sell” recommendation.  It is no wonder this market is in a shambles!  AIB is down 96% during the period that the analyst had a “buy” recommendation.  How much are they down during the “sell”?  UP 19%!

In fairness to the analyst, the sell recommendation might prove to a be a good call.  This bank, along with the economy in Ireland, has been incredibly hard hit.  The bank just might go away.  However, if it doesn’t, it could be a huge gainer with a long term horizon.  In fact, do a little research on this stock.  They hold a stake in M&T Bank (MTB) that is about 20% of MTB.  AIB trades well below the value of their MTB holdings alone. ]]> http://www.bobandscott.com/education/you-might-want-to-do-your-own-research/feed/ 0 http://www.bobandscott.com/trading-notes/trading-log/purchased-aib-169/ http://www.bobandscott.com/trading-notes/trading-log/purchased-aib-169/#comments Thu, 26 Mar 2009 15:34:59 +0000 BobL http://www.badgermedia.com/?p=75 1,000 shares @ $1.69

The financials are where the volatility is with this market. AIB is an interesting play and should make for a decent trade. Many who play AIB are also playing IRE. I don’t have any personal opinion on the latter.

In the case of AIB, they own about 20% of MTB.  The value of their MTB holding exceeds the market cap of the company.