$WAMUQ: The Roller Coaster Continues
March 18th, 2010 at 10:22 am Posted by
When The Dean was a little boy, his grandmother, who was heavily invested in stocks, advised him to, “only buy blue chip companies that have little or no downside risk,” and, “always work with a broker that has an impeccable reputation.”
Fortunately, Grandma didn’t live to see her invulnerable portfolio ravaged by the bankruptcy of Polaroid in 2001, the break-up of AT&T (NYSE: T), which today bares no resemblance to the Ma Bell of years past, the devastation of U.S. Steel, a stock that two years ago traded at $196 and is now hovering around $60, and her pride and joy, the ever reliable General Motors which, if you are a U.S. Taxpayer, you now own a piece of. (By the way, her managed account was at Lehman Brothers.)
That’s why The Dean is such a huge fan of penny stocks, particularly those companies that trade in a wide range.
Which brings us to $WAMUQ, better know as, what’s left of Washington Mutual!
When WAMU was seized by the government in September of 2008, it’s stock went from $3 to $0.03 in a single morning. Since then, it has been trading in a range between $0.015 – $0.70. That’s enormous!
And, why is this happening? Turmoil!
Turmoil like that which ensued last week, when the bank’s holding company announced that it had reached a settlement with JP Morgan Chase (NYSE: JPM), which was given Washington Mutual in a forced sale by the FDIC, causing $WAMUQ to slip over 47% in last Friday’s trading.
But, there’s nothing new about that. In the previous five days, $WAMUQ traded up and down, between $0.33 – $0.69, something it routinely does as speculators buy and sell this stock like penny candy.
The Dean’s thoughts: Buy $WAMUQ on dips, and sell on rallies . . . over and over again. This stock will be up and down all week long . . . just as it is every week.
