Run from the Banks?

Wednesday, 12 Dec 2007 | 7:26 PM ET

Morgan Stanley made Citigroup their top short for 2008, citing a dividend cut and deteriorating earnings. Is there still time to trade it?

Jon Merriman, Chief Executive of Merriman, Curhan Ford & Co. joins the panel for this conversation. Following is a synopsis of his main points.

While not as bad as the banking crisis of the early 90s, today's money center banks still have significant downside ( between 20% - 30%) due to their subprime exposure, says Merriman.

Back in the early ‘90s, he adds, there was legitimate concern that Citigroup would go out of business as the stock sank to the single digits. That's probably not likely now, but I recommend investors short the large money center banks whose accounting remains somewhat opaque.

According to Merriman, names with the biggest downside risk could include Bank of America (BAC), Citigroup (C), and Wells Fargo (WFC).

Pete Najarian isn’t sure about Merriman's thesis. He likes US Bancorp (USB) and WFC because Warren Buffett owns these stocks.

Tomorrow's Trades #2: Banks
The best way to trade in 2008 could mean shorting the banks, with John Merriman, Merriman, Curhan Ford & Co. CEO and the Fast Money traders.

  Price   Change %Change

Got something to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap! Prefer to keep it between us? You can still send questions and comments to fastmoney@cnbc.com.

Trader disclosure: On Dec. 12, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (ATVI), (YHOO), (INTC); Najarian Owns (CSCO), (ADCT); Najarian Owns (GOOG) Options, (GS) Options, (TSO) Options, (YHOO) Options, (BIIB) Options; Finerman's Firm And Finerman Own (GS), (FTWR); Finerman's Firm Owns (VLO), (SUN), (YHOO), (TSO); Finerman's Firm Owns (MDY) Puts And Is Short (MDY); Finerman's Firm Is Short (SPY), (IJR), (IYR), (IWM), (MBI); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; Finerman's Firm Owns (BIIB) Options; Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm Owns S&P 500 Puts; CNBC Is A Service Of NBC Universal And Dow Jones; GE Is The Parent Company Of CNBC; NBC Universal Is The Parent Company Of CNBC; Vivendi Owns 20% Of NBC Universal, The Parent Company Of CNBC

  Price   Change %Change


Contact Fast Money

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET
  • Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

  • Scott Wapner is host of the "Fast Money Halftime Report," which airs weekdays from 12 p.m. to 1 p.m. ET.

  • Guy Adami is a contributor on CNBC's "Fast Money." He also is managing director of stockMONSTER.com.

  • Najarian, the "Pit Boss," is cofounder of optionMONSTER.com, a news site for options traders.

  • Finerman is president of Metropolitan Capital Advisors, Inc., a company she co-founded.

  • Founder of EmergingMoney.com

  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

Halftime Report