Rafael Grillo

E*Trade Primed for a Breakout

Heated discussion here!! No need to get nasty. I am long on E*Trade, and not without some hesitation. I am confident that they are doing the right things, and I particularly rely on the strong equity of their brand. But no doubt their financial situation is still fragile, and the economic and financial environment is not helping. Highly unlikely, but this is a company that could be pushed into bankruptcy not because of their wrongdoing, but because of adverse conditions should a second shoe drops on the credit crisis or the economy folds under the weight of high oil prices (this is my main concern right now). Having said that, I don't think E*Trade will go back to $2-$2.50. That was a panic bottom, not a technical one. If you remember, the sky was falling at that time and judgement day was around the corner. I would not be surprised if the share price goes to the high singles by year end. It will take several quarters for it to break the $10 mark though. I would not expect it to happen until next spring or so. I certainly hope to be wrong, and would be delighted to have a nice Christmas present, but I certainly don't expect it. Yet, we are talking of a great risk-reward profile here. Chances of losing half of your investment: very low. Chances of doubling your money: very high. That sounds good to me!