XLF, Banking and Financial Sector Stocks

Top 56. Dec 14, 1999 11:01 AM

» Kirk - XLF purchased.

Bought 1% worth at $23.75
Lets see what happens.
I might go to 5% in this sector if we get good opportunity to add.
The others we have discussed are still options.

-- posted by Kirk

Top 57. Dec 14, 1999 4:05 PM

» MichaelC_AU - Banks

The January effect takes place in Dec and January and is when fund managers "window dress" their portfolio's to give the appearance that the money is invested well. The year's best performers finish strong in December as a result.

This year's performers we the internet and technology stocks. Yahoo and Redhat have had spectacular 1999 returns and December returns.
Banks on the other hand are being left high and dry. $10 a share has got to be a buying opportunity. This month's trend will reverse itself and hopefully we will see a craze for financials, due to glass stegall repeal.

I like that news article listed under yahoo's cnb profile. It says that the largest US banks will flourish, while the others will either be bought or die. The author has a good point about fixing a system that is not broken.

-- posted by MichaelC_AU

Top 58. Dec 16, 1999 12:39 AM

» JenL_2 - I'm in also - XLF...

...at least I think so anyway. The Schwab site isn't reporting order status at the present time, but I had a limit order in @ 23 1/2, and XLF closed @ 23 15/32.

XLF intraday Chart

Am also looking at the BTO that Thruhiker mentioned. Charles Schwab contitutes about 20% of Baron Asset, and I have that in IRA and 401K - so will consider that also as exposure to the financial sector.....Jen

-- posted by JenL_2

Top 59. Dec 16, 1999 6:57 AM

» Thruhiker - Kirk

I agree that XLF is a great long term investment.

However...I like BTO for next year as there should be increased merger activity before the accounting rules change 1/1/01. Any "contemplated" mergers or takeovers are gonna happen next year to beat that magical date. These mergers are gonna be at the smaller bank/thrift level, NOT the giant companies in the XLF. The top 10 holdings of the XLF total 50% of the portfolio. These guys are not going to participate in what I see happening next year.

But what the hell do I know? I live in the woods and drink out of creeks (at least as much as I can!)

-- posted by Thruhiker

Top 60. Dec 16, 1999 7:17 AM

» Kirk - XLF vs BTO

XLF was a purchase I needed to fill a hole in my allocation. I have much more room to add and I might, but I didn't have enough information to make a decision on BTO to feel comfortable. Some have postulated the the real loser banks will be left to die so they could balance out ones in the portfolio that get bought for a premium. One way or another, I know that the whole industry will go up so a core XLF position is the first order of business.

Now we can debate BTO vs FSRBX vs specific purchases. How about some good, profitable banks that are making money but have low valuations?

BAC, FTU, JPM, ONE & WM are all cheap and profitable. I look for one or more of these names to be gone in a merger. Look how cheap they are relative for C & WFC
http://finance.yahoo.com/q?s=bac+ftu+jpm...

Owning XLF should capture any of that action.

Again, many know my key to success is to have a core position in good mutual funds (or sector spydrs) and then add individual stocks. Wireless, I could not decide on Nokia so I just owned MNGCX. I may not make the best choice as far as return, but I do get the sector covered and participate.

With BTO, I need more recent information on what they hold before U can invest. I just get too scared that I get another UTEK with BTO and get stuck watching XLF fly just like UTEK shareholders got to watch AMAT, LRCX, TER, NVLS, etc fly when semiconductor capital equipment came back into favor.

I STILL like the idea of a fund like BTO, so please post more information when found. I'd like to see some performance comparisons for the past few years.

I do have their Top 10 holdings from 9/30/99 in a report I got from Fidelity and printed out. When time allows, I will investigate further.

-- posted by Kirk

Top 61. Dec 16, 1999 12:56 PM

» Rande - Did some nibbling today.

Did some nibbling today. Added to BTTRX in the IRAs, picked up some XLF @ 23 and even went for a tiny bit of BTO. Anyway, nothing spectacular -- have done pretty well with the telecoms and techs and still staying with those positions as well as the core W5000 (with a little Schwab 1000 and SPY from days gone by). Figured a little addition to the financials couldn't hurt about now. Always darkest before the dawn. Right? Either that, or we sleep in awhile longer.

-- posted by Rande

Top 62. Dec 16, 1999 1:14 PM

» SteveT - How tax efficient is XLF? I am a little heavy on C about 8% of

How tax efficient is XLF? I am a little heavy on C about 8% of equities most was bought last Summer in a employee stock purchase plan. As I see it I could do 1 of 3 things. 1.Hold tight until I get to 1 year and sell half and pay long term capital gains (I hope). 2.Sell half now and sleep better as I will be down to 4%. 3. Write some covered calls for half. This would either get me out at a favorable price or pick up a little if it don't hit the strike price.

I am thinking of putting the proceeds in XLF. I don't really like paying taxes on those C Divendends. Any holes in this line of thinking? What do you think of these options?

-- posted by SteveT

Top 63. Dec 16, 1999 1:30 PM

» Kirk - Rande

...just can't let that chimp have all the bananas, eh?

-- posted by Kirk

Top 64. Dec 16, 1999 1:38 PM

» Kirk - C

Steve
I wrote in my first Savvy Newsletter that Citogroup is more of a financial services mutual fund than an individual stock. Consider it was a merger of Travelers (Insurance) and Citibank (Bank) and you can easily make an 8% argument. I loaded up at 20% in the portfolio with the other 80% in technology but then this was matched by mutual funds so it was really 10%:40% financial:technology. I would sleep like a baby with C at 10% of my holdings. Similar to GE if you are a Brinker follower.

-- posted by Kirk