The Bad News Victims of 2008 are the New Victors of 2009

The Bad News Victims—
Profits from Selling Short
The Banks

Shorting the banks was like shooting fish in a barrel as their problems are very easy to spot in public documents ranging from SEC filings to mortgage origination data.

The Financial Select Sector SPDR (XLF), the ETF representing the sector, is down 54% in 2008, but individual names beat that easily and selected names are down much more—Bear Stearns is gone, Freddie and Fannie are gone, Citigroup (C) is down 71%.

Does this mean the run is over? No. I see another leg down coming among selected names, led by Citi, which not only has problems with its balance sheet but more than $1.2 trillion in off-balance-sheet assets of unknown value at this time.

Keep trading the banks to the bottom. Continue to short Citigroup (C), Capital One (COF) and Discover Financial Services (DFS) in 2009.

Access Michael Shulman’s insight into this current economic crisis