Another very interesting video worth watching. Although the interview was conducted a few months back Bruce Berkowitz’ rationale is still valid. He is bullish financials and his trade entry rationale is simply compelling. During the video he explains in a very detailed way why he thinks getting exposure is the smart thing to do as he expects this bet to pay off big time. Listen and learn about what he has to say about sentiment analysis, respecting the charts and controlling risk. He actually is an extremely risk averse guy.
Bruce R. Berkowitz is an equity fund manager and registered investment adviser. Berkowitz founded Fairholme Capital Management in 1997 and was formerly a senior portfolio manager at Lehman Brothers Holdings and a managing director of Smith Barney. Berkowitz was named 2009 Domestic-Stock Fund Manager of the Year and Domestic-Stock Fund Manager of the Decade by Morningstar, Inc.
Right now the markets would display lots of internal strength if lagging sectors would come into play. Namely the financials and the healthcare sector. If we see this kind of sector rotation kick in, odds for the markets to move higher will be much greater. Actually I recently added MRGE – Merge Healthcare to my public list. I traded that one in the past and the chart is now setting up again. Time to monitor MRGE very closely again.
The components are: MRGE – Merge Healthcare, CERN – Cerner, HMSY – Health Management Systems, WBMD – WebMD Health Corp., TRCR – Transcend Services, FHCO – Female Health. If you are more into trading ETFs, XLV – Healthcare ETF is one that comes to mind.
His top financial stock pick for a long-term diversified portfolio Bruce Berkowitz mentions in the video interview is NYSE listed MBI – MBIA Inc. Here is my technical analysis of MBI’s weekly chart showing Bruce Berkowitz is indeed on to something:
Click on the chart to maximize.
MBI – MBIA Inc. is displaying a rounding bottom with multiple levels of support. As I outlined in my chart annotations the set-up offers great potential to the upside with great risk control using a rather tight stop loss.
The components are: GS – Goldman Sachs (Lloyd Blankfein Video Interview), BAC – Bank of America, JPM – J.P. Morgan Chase, DB – Deutsche Bank, MS – Morgan Stanley, IBKR – Interactive Brokers. Another way to play the financials would be XLF – Financials ETF.
The main reason though, why I ultimately decided to post this video is because Bruce Berkowitz mentions something extremely important at the very end of the interview. This is absolutely timeless wisdom. It doesn’t get any better than this and I agree 100% with what he says. Here’s the quote from the video:
“What worries me is knowing that it’s usually a person’s last investment idea that kills them. That as you get bigger you put more into your investments and that last idea that may be bad will end up losing more than what you’ve made over decades.”
This is crucial. You constantly want to monitor and pay attention to these things. If your overall approach to trading is flawed it is just a matter of time until you pay the price and get wiped out.
Your success in investing will depend in part on your character and guts, and in part on your ability to realize at the height of the ebullience and the depth of despair alike that this too shall pass. – John Bogle
My public list with all my charts can be viewed here:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469
Buenas noches!
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