By: Revanche

A Twitter-like conversation about the stock market

September 29, 2008

Some months ago, a friend and I discussed how buying banks is currently A Bad Idea. Considering Wamu had dropped to about $12/share, it definitely seemed like banks were in for a wild ride. Friend recently confessed to buying more financials: more Wamu, Citigroup, Wachovia, Amex. Given our conversation and conviction with which “banks are bad” was previously stated, I couldn’t resist ribbing Friend today.

Revanche: Did you hear about Citi + Wachovia?
Friend: Don’t remind me about Citi + Wachovia.
R: Why, isn’t this a good thing? Doesn’t this mean at least one set of stocks won’t be worthless? *blink blink*
F: I hate you.
R: Hey, good news: current bailout plan voted down! (Friend was unhappy about the bailout.)
F: Hm, modified bailout (less money) will probably come up for vote soon. Maybe they’re waiting for my financials portfolio to become insolvent first.
R: That’s not going to take long. Are you really going to hold on to them?
F: What choice do I have?
R: Do you have a good reason to hold on? “Hope” isn’t really a strong strategy.
F: Locking in my losses isn’t a good strategy, either. Any other advice, Ms. Buffett?
R: My logic sucks less than yours, Wamu.
F: Grrr…..

I wanted to point out that selling at a loss and having a tax credit seems better than having more worthless stock (a la the Wamu shares) at the end of the day. Buuut I think Friend was no longer in the mood to chat. And what do I know, anyway? I don’t play in the stock market.