Winning Secret for Short Term Trading
Once in a Century Financial Crisis
Once in a Lifetime Investment Opportunity
September 26, 2008
Current Financial meltdown, as pre-FED Chairman Alan Greenspan described, may only happen once in our lifetime. But on the other hand, it may provide a rare investment opportunity for us. This is particularly true for stocks in financial sector, which hit the hardest recently.
FRE is one of the latest example.
We started taking big positions in Freddie Mac (FRE) and Fannie Mae (FNM) stocks last week, mostly in FRE stock, and closed all of our positions today.
Our own Fund (trial Short Term Portfolio) bought 200k shares at $0.52 and sold all at $2.64, gained 407.69% in one week, making a net profit of around $428k. Click for Details.
Several accounts we managed (wealth management accounts) made even bigger returns. Many bought FRE at $0.32 and were all-in and gained anywhere from 700% - 800%. One client's account saw its account size gained from $40k to $320k within a week.
Our Portfolio (Core Portfolio) also bought it but at a higher price: $0.61 and closed our position today, made a 332% gain in a week.
What is the reasoning behind our buys?
We have paid great attention to what Treasury Secretary Henry Paulson said after Government took over FRE and FNM:
"We noticed that several big institutional investment funds incurred heavy loses on their FRE and FNM investment. Our government will give them a chance to make up their loses in later times."
Our view was that those big investment funds will step in a big way after the stock dropped low enough. Then they will work hard to push them much higher and sell the stock for huge profit to make up their loses.
SEC fillings also showed that Franklin Resources bought over 20 million shares at around $0.25 and several other institutions bought big at similar prices. At the same time, government announced that many financial stocks, FRE and FNM included, cannot be shorted before December 2, 2008.
Based on all the analysis, we pulled the trigger when the price hit $0.25 and raising. We strongly believe that this is one of lifetime opportunity that we cannot miss.
Many other opportunities are waiting for usahead of us.
Now the US stock market is in a total chaos. People are panic. But that is the perfect time to make money.