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20s Money Portfolio Update: Bought SKF – UltraShort Financial ETF

20 August 2008 4 Comments

Yesterday, I decided to build a position in SKF – the UltraShort Financial ETF because I think the financial sector has more to drop.

I have been reading credible arguments which explain that more bank failures are on the way including probably one or more major bank names such as Bear Stearns. Meanwhile, Freddie Mac and Fannie Mae continue to get hammered. With the ETF price hovering around $130 right now, I am hoping for the price to get back up towards the $200 level that it was at just months ago.

If I can sell my position around $180, it would be an approximate 27% gain. While the price may go down as financials bounce every now and then, I think the upside to banks are limited with the downside having more potential; therefore, the UltraShort ETF has higher potential upside.

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4 Comments »

  • torbjorn rive said:

    Good point, and probably a good purchase. I entered a position at $115 a while back and have nursed waves of volatility, but now am happy and quite sure we’ve passed our recent resistance point. Time to run with it.

    Though I’m not sure it’ll hit that $200 mark again (wouldn’t mind if it did, but that steam’s been blown off I think) – it’s certainly headed past $140-150, where it may battle its next resistance.

    Super.

  • kevin duffey said:

    You are probably right about the $200 mark. I am thinking a nice bounce by the end of the year is likely. I think once it blasts through 140, it could spike pretty fast.

    If a spike happens, I will probably unload the position for a decent gain.

    On a side note, I am trying to identify a target price with my trades in order to establish what I want to earn on this move up front. Once the position hits that target, I want to be more disciplined in getting out and taking profits. I am determined to do this with SKF. My target is the $175-$180 range.

    We’ll see.

  • torbjorn rive said:

    Thanks for the reply, Kevin.

    Personally I’ll be “ready” to exit around $150 and be happy with what I profit. BUT depending on what develops between 140 and 165 I’m just going to be diligent with my trailing stops.