Question #1: Vicki from New York doesn’t anticipate an up-turn in the housing market anytime soon. She asks if she should short Bear Stearns (BSC) on the potential slowdown in its mortgage trading business?
Tim Strazzini says no. Instead he tells Vicki to swap out of Bear Stearns and buy Morgan Stanley (MS) or Merrill Lynch (MER) as long term investments, because they don’t have the mortgage exposure that BS has.