Current trading ideas

We're coming up on the inaguration and a short trading week so I wanted to take the chance to go over what major themes I'm trading on and how to position a portfolio going forward.

The way I develop my ideas is from a "Top Down" perspective. I try and determine what cyclical trends I see going forward and develop trades based on those themes.

The most apparent theme to anyone watching the news is the finacial bailout/stimulus package. This boondoggel is so large, it covers 5 of my major trading ideas.

1)Treasury Bubble - Who on earth would tie up there money for 30 years to get a 3% coupon? The treasury is... by threatening to print money and purchase long dated treasury's, the long bond rate has been pushed down from 4.5% to 3%. By printing money, the fed in encouraging inflation and dooming us to inflation. I beleive it is just a matter of time until we see the long bond with a 6 or 7% yield. Take advantage of this by buying the Proshares ultra short bond fund (TBT) at $40 per share. Place a stop loss at $35 and look for a break out if it trades over $42.

2)Bank Bailout - As mentioned in an earlier post, some of the bank preferred stocks look like real bargains. You get to invest on at better terms the the fed does. I beleive the best risk/reward trades is the Bank of America convertable preferred series L. (BAC.L) Purchase the stock here at $486 and collect a 15% yield. I'd set my stop loss at $450 and hope for a quiet couple of weeks.

It's getting late so the rest will be tomrrow

B of A gets the bailout - where do you invest tomorrow

Just over the wires, B of A gets 118 Billion loan guarantee to cover the "assets" it purchased from ML and 20 more billion in TARP funds at an 8% rate. The TARP will also extend the loan maturity from 3 years to 10 years. In return B of A will cut the dividend on the common stock to $.04 per year for the next 3 years.
What does this mean? The bank preferreds look like gold. I was a little worried that the banks might get the AIG/FNM equity haircut, but once again, the treasury came to the rescue. I believe Citi will get another bailout too. Why? Not because the treasury cares about the health of the system, it's because they don't want to look bad. Think about it, if the treasury lets any of these large TARP banks fail, the gov loses its initial investment. The loss will be all over the news for a week, there will be months of congressional hearings. Dylan Ratigan will be screamong "How could you gamble our money" every 30 seconds. Heads will fly. Contrast that with throwing in a little more money from the TARP, give a loan guarantee, then you can get on CNBC and claim you made money on the investment. What would you rather do.

Trades: Citi preferred class P - $10.50 a share, 18% Yield , Citi preferred class M - $11.00 a share, 17.7% yield. B of A convertible preferred class L - $500 a share, 14.5% yield

These are winners, safer than the common, good income and now backstopped by the fed.

I thought Google was smarter

For a supposed "tech leader" Google sure doesn't think ahead. When trying to name this blog, I had 4 previous ideas, all of them taken. I'm not upset that they're taken, just that they have a total of 4 posts and most haven't been updated since they were started. What's the point of having a domain taken if there is no content?
Wisen up Google, charge some small fee per year for the blog space. Not that you intend to make a huge profit, it will just ensure the domains are used by active posters.
Hope I don't get cutoff for insulting the host with my 1st post.