So of you may have heard how some Citi (NYSE: C) sell-side jockey named Prashant Bhatia (nickname being “Capital IQ”) said that E*Trade has a 15% chance of bankruptcy and faces a potential run on the bank. This is probably the most hysterical piece of sell-side analyst I can recall, but it may be a self-fulfilling prophesy. The best way to create a run on the bank that would lead to a serious dimunition in the E*Trade’s share price is to talk about how you think a run on the bank is likekly to happen and then publish that report as “research”.
Hysteria aside, how does an E*Trade customer protect his assets, if they are above $100,000 (FDIC guaranteed) or $500,000 (SPIC guaranteed)?
I have devised a simple strategy. Assuming a binary outcome that E*Trade (NASDAQ: ETFC) is either 100% effed or 100% ok, the dominant decision is to sell all of your assets and use the proceeds to go 100% long E*Trade. This way either E*Trade stock’s rebounds to its pre-hysteria levels and you have what I like to call a double or maybe a triple. Or you lose all your money that E*Trade would not have been able to give you anyway, so you in effect lose nothing.
Full Disclosure: I now have 100% of my PA long ETFC. Also E*Trade accounts are guaranteed up to $500,000 under SIPC for anything other than loss in the actual value of securities, so let’s step back into the real world.Related Reseach:
- The Llama of Lame
- LoS Moves the Markets
- Examining The E*Trade Engine
- Citibank is the Mini-Baller Bank
- Satan's Portfolio: RICK PTR TXT
- The Market, She's a Bitch
- How to get an A on your 13-D
- Sometimes the sell-side sucks, other times they're just annoying.
- "Smith Barney, Why do you hate your customers?" A Play by JD
- GOOG, No Means Yes Baby Part 1
- The Sell Side: A Case in Point
- The Sell Side (A Continuing Series)