Jim Rogers Short On US Financials
Jim Rogers doesn’t have any faith in the US financial companies. According to Bloomberg:
Jim Rogers, co-founder of the Quantum Hedge Fund with billionaire George Soros, boosted his bets against U.S. securities firms because of their salary “excesses” and money-losing investments.
Rogers said he increased his year-old short positions in the past six weeks in U.S. investment banks, using exchange-traded funds and bets against individual companies he declined to name. Stocks in the industry, which pays too much in bonuses, may fall as much as 70 percent in a bear market, he said.
“You see 29-year-olds on Wall Street making $10 million to $20 million a year, and they think it’s normal,” Rogers, 65, said in an interview in London today.
The top five U.S. securities firms will probably earn a combined $29.3 billion this year, according to analysts surveyed by Bloomberg, breaking a three-year record streak after Merrill Lynch & Co. reported a $2.2 billion third-quarter loss. Goldman Sachs Group Inc., Morgan Stanley, Merrill, Lehman Brothers Holdings Inc. and Bear Stearns Cos. earned $30.7 billion last year, three times more than their profit in 2002.
Goldman Sachs, Wall Street’s most-profitable securities firm, said Sept. 20 that it set aside $16.9 billion to pay salaries, benefits and bonuses in the first nine months of the year, topping the record amount for all of last year.
A month later, Merrill Lynch reported its biggest quarterly loss amid $8.4 billion of writedowns for subprime mortgages, asset-backed bonds and bad loans.
Jim Rogers is short via the use of ETFs. One way you can get in on the action is through UltraShort Financials ProShares (SKF). SKF is a leveraged ETF that returns twice the daily inverse of the Dow Jones Financials Index.
Recently financials like Bank of America, Citigroup and Bear Stearns have reported pretty bad news. Seems like SKF would be a safer bet than shorting any of these companies themselves.
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November 12th, 2007 at 1:56 pm
[…] OFF DIVIDENDS presents Jim Rogers Short On US Financials posted at LIVING OFF DIVIDENDS, saying, “How to profit from the current negative sentiment […]
December 2nd, 2007 at 12:31 am
This scrawny bowtie guy has had his head handed to him the past four trading days. He’s anti-American and should be thrown off the floor of the NYSE and sent packing back home to Singapore.
December 2nd, 2007 at 12:56 am
How is he anti-American? Just because he thinks the Government and the Feds are driving the US into bankruptcy doesn’t make him anti-American.
If anything, George Bush is anti-American. He’s sending young kids to Iraq to get maimed and killed. The ones that get back safely suffer severe psychological trauma. Did you know more Iraqi war veterans committed suicide last year than have died since the beginning of the invasion. Don’t tell that being American!