Banking

I haven’t written about anything market-related in a couple weeks. This is mainly due to other demands on my time, but my reading regime hasn’t waned, so the ideas I have are plentiful. One thing that’s on my mind is how tremendously shady the world of investment banking appears to be, with not only the collapse of two Bear Sterns hedge funds (both recently launched) within a week due to more mortgage woes, but the involvement of US Treasury Secretary Paulson in preventing SEC Chairman Cox from writing an amicus brief to the Supreme Court on behalf of Enron shareholders. The ethical implications here are blinding, as Paulson came from Goldman Sachs to work in Bush’s cabinet, and the investment banks had already lost the trial. An appeals court overturned the verdict, and so the case was SCOTUS-bound, or at least it should have been.

My intention is to make sure that I’ve always got a piece of the finance-portion of the US economy in my portfolio, and now that BSC and GS are dancing the Charleston, I’m considering State Street Corporation. Their business is more about processing transactions on a global basis, so as individual regions expand, their revenue increases along with it. A single meltdown on the domestic side won’t derail State Street, and in times like these, when the known-unknowns (thank you Rummy) are piling up, this type of a business model is more my cup of tea. Clearly not as sexy as the aformentioned shadier banks – I’m not really expecting anything more than 10% if I hold it for a full year – the hundreds of sub-custodians (banks in countries abroad that act as weigh stations or distribution points for their nations’ customers) out there should see a regular increase in transaction volume month to month when compared with the previous fiscal year, and in the South Pacific especially, this will equal higher revenue for State Street. And since 99.999999999% of this extra work is completed by their internal information technology systems, the profit margin only grows from this trend.

Malaysia-focused ETFs are what I’m looking at right now, as along with the banking pick, I want to make sure that I’ve got an invitation to this party as well. What Latin America did for my portfolios from 2003-2006, a couple well placed purchases in this region could be just the thing to help rescue me from what has thus far been a pathetic showing this year through five months (+3.71%). Simply put, I’m looking outward for my piece of the near future. My trust in the FED is in tact, but with that said, there needs to be a lot more to smile at than a series of engineered statistics for there to be still this much juice left in the US stock markets for the rest of 2007.  Still bullish on energy, especially oil, gas and coal – I’m not the slightest bit nervous about my two technology picks Oracle and Adobe – Iphone or no Iphone, I’m scared of all retail stocks at the moment, with Dell being the only one on my radar.

Ticker/Price/(Buy)/Shares/Value
ACI 35.01 (34.37) 1000 $35,000
ADBE 40.37 (41.89) 1650 $66,610.50
BAM 40.55 (39.60) 7327.5 $297,130.13
CNQ 66.39 (62.66) 3535 $234,688.65
ORCL 20.00 (19.17) 4000 $80,000
PBR 122.31 (101.04) 1891 $231,363.85
TS 49.15 (45.93) 2000 $98,320.00
CASH $100,127.53
Total $1,143,698.69
Gain 3.71% $40,883.33