Last year, I thought financials such as banks/brokerages were heading for trouble and that's exactly what happened. We held highly liquid positions such as Berkshire Hathaway and Leucadia National, but just in case hedged these positions with some of the new UltraShort ETF's, in particular the SRS and SKF ETF's. This worked well as both BH and Leucadia had significant gains as well as the ETF's.
Currently, it looks like the latest rate cuts will support financials but I think there are still a lot of problems to come. I would continue to underweight financials, but would add to Berkshire Hathaway, in particular. It's one of the few legitimate AAA-rated companies with $50B in liquidity (more with leverage) and Warren Buffett should do well investing in this environment.
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1 comment:
Interesting. If you have links to articles that may support some of your thoughts, that would be useful!
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