I have five minutes to go before I have to leave so here are a few of my predictions for 2008
I had mentioned buying northern rock shares a while back, and i am pleased to see they took a 7% jump in the last few days. I think the rationale holds true, there is too much at stake for government to allow them to go bust, mainly because the Bank of England gave it more support than it ever should have. This predictions looks likely to come to a good end, just not for most of the shareholders
Next, I have a new prediction for today, and it has to do with the 40 billion cash injection that the Fed gave the market, the base rate may not get cut in the early new year but I have a feeling that the US interest rate will go down further, maybe as low as 3% before this worldwide crunch is over. The problem still boils
down to interbank distrust because their rates are extraordinarily high. the Euribor hasn’t come down much either, so things are not going to be getting better any time soon.
However, there is an opportunity to clean up. For the people selling short and those who sit by the river with their poles in the water awaiting value this is a great time. A terrible time for general buying but a perfect time for slaughterhouse sales. Citigroup, Sallymae and NorthernRock are all stocks that i am going to purchase personally, so this isn’t a blog on ‘what may be’ this is me putting my money where my mouth is, I can’t afford to just randomly pipe out some financial rubbish if I’m willing to put my cash
on the line. Not many people take this approach but hey…. we don’t follow the norms here anyways.
Vikram Pandit took over as Citigroup’s new ceo, they have been feeling a huge crunch due to the sub-prime mess. indeed it was Citigroup who created ‘siv’s’ – structured investment vehicles. and this was a large part of what underlies the credit crunch. SIV’s take short term debt and sell it, then use the proceeds to purchase higher risk assets. The prediction here is that Citigroup are going to fall a further 10% then rebound because Vikram is the man to turn this mess around. Don’t agree? that’s O.K. just don’t disagree and not have an opinion