Good time to short JP Morgan?
Here's a company that just reported crappy earnings, the CEO says the worst isn't over AND it's rallying...wth? Wayne just wrote a blog post on the TickerHound blog saying the same thing:
http://blog.tickerhound.com/2008/07/17/its-about-education-not-information /
Is this a good chance to make a few quick bucks shorting this stock?
Answers
3090 points
EthanR answered 4 months ago …
I don't think so, Creezy. Believe it or not, JPM is one of the better performing stocks in the financial sector. And you are in the middle of a bear market rally right now that could go higher before it's done. I think yoiu are better off choosing a stock in the financial sector that is one of the weakest performing stocks to short. Same old story, analysts beat down expectations, the stock tanks, then the earnings come in better than expectations and the stock rallies. Nobody cares if they are losing money. That's Wall Street for ya.
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209 points
MichaelShulman answered 4 months ago …
There is a lot of froth in the market right now, so for the short-term, the financials are a tough place for new money. And despite its poor recent earnings, in the long-term, JPM looks solid at this point.
While I prefer using put options to play the short side and don't recommend naked shorting, especially in light of this most recent short-covering rally, if you're looking for shorting ideas, Citigroup remains overvalued. I believe the stock is worth $8-$10.
Merrill Lynch is also sitting on the garbage heap that is its balance sheet – it's just a matter of time before it releases how much damage has truly been done. It's still unclear how the company will generate meaningful earnings in the coming quarters.
677 points
Dragonsbane answered 4 months ago …
As Ethan and Michael suggested, you could probably make more money shorting another financial stock. However, puts on JP Morgan have a lot more upside than puts on other financial firms since the worst has yet to be priced in for JP Morgan. Having said that, I would defer to the opinion of the options expert above.
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