mikeylikesit41

E-Trade Financial Carries High Risk-Reward

It's been tough hanging onto this stock and increasing my positions evertime it dips heavily... but I concur with your brief analysis. Sometime in the next year (probably Feb-Mar '09), this stock will double to around $6.5.

I'm basing this on a few assumptions with some analysis of expected trading volumes and the mortgage crisis flattening out sometime in Dec-Jan.

1) The fear of E*Trade going bankrupt is gone from the investors mind. Maybe not totally, but it's suppressed at least.
2) The market has been volatile and trading volume goes up during those times.
3) While the housing crisis still has a little ways to go before bottoming out, I'm seeing houses in AZ, FL and CA that are now in a price range I'd be comfortable with purchasing. I spent some time traveling since Jan and I've been monitoring prices. The homes in Phoenix that I wanted to buy were still too high in May but are now around the sweet spot of $85/sq ft.
4) As more folks realize what they have to sell their homes for (or not move), all prices will be in the sweet spot instead of huge variations within neighborhoods.
5) Purchases will begin to pick up with no price increases for the next 2 years at that time.
6) The global economy is suffering now. Inflation is on the rise. I figured out that the fed wanted that to happen last November. I think my exact statement was " the fed is going to inflate our way out. That way folks can sell their house for a decent price that psychologically makes them happy even though based on inflation, they lost a lot more then they know"..

All of that will help E*trade reduce more losses and increase income.

Please keep in mind, based on the math, there is now way this stock will be worth more than $6 for a loooong time.

For now though, keep selling your shares, I'll keep buying the heavy dips and make a nice killing next year.

Thanks