Friday's Playbook



With nearly $70 billion in write-downs announced already, how much more is lurking?

Brian Schaeffer, Van Der Moolen Capital Markets Managing Director, joins the panel for this conversation. Following is a summary of his main points.

Are you worried?

I don’t want to be a fear monger, says Schaeffer, but we’re up to $80 billion in write-downs at this point in time. And the word on the Street is to expect in excess of $250 billion in write-downs.

How would you trade it?
My trade is to back off. I would short the Financial ETF replies Schaeffer. Don’t try to catch a falling knife.

If an investor currently holds financials, what would you recommend?

I would say sell. For example, I expect to see Citigroup at $22 – $25 at some point.

Pete Najarian sees it differently. I like the investment banks, he says. Goldman Sachs (GS), Morgan Stanley (MS) and Lehman (LEH) all released earnings earlier in December and I thought their core numbers were phenomenal. But don’t bottom pick, he adds.



What will be the biggest health care themes of 2008, and how do you trade them?

CNBC Pharmaceuticals Reporter Mike Huckman joins the panel for this conversation. Following is a synopsis of his main points.

Any day the FDA is expected to approve a new drug-coated stent from Medtronic . A few months later they could approve another one from Abbott Laboratories . It’s a big deal because it will bring more competition to the space.

In late February the FDA is expected to make a decision on Avastin for breast cancer, Huckman explains. If approved analysts believe it could be a blockbuster for Genentech (DNA). (It’s worth noting an advisory panel previously voted 5-4 against this drug.)

About the middle of this year Dendreon (DNDN) should release more data on prostate cancer drug Provenge. If it significantly extends the lives of patients it could get quick FDA approval. However, Huckman cautions this stock is not for the faint of wallet.



You've traded winners and losers this year. Now, how do you deal with the tax man?

Focus on stocks in your portfolio that were long-term losers – long term meaning anything longer than a year, says Karen Finerman.

Although you have to wait 31 days to buy it back (or risk violating your tax treatment), I recommend selling losers. Don’t wait for the stock to get back to cost before you sell. Pair off your gains with your losses, now.

And if you have an aging loser that you really want to hold – you can buy an “out of the money put” which will end your holding period and allow you to sidestep a long-term loss, which is something you really want to avoid, she says.

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Trader disclosure: On Dec. 27, 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 (DIS), (YHOO), (INTC); Najarian Owns (C), (CSCO), (MS), (MSFT), (BIIB); Najarian Owns (YHOO) Options; Najarian Owns (CSUN) Options; Finerman Owns (GS); Finerman's Firm And Finerman Own (HD), (FLS); Finerman's Firm Owns (PLCE), (SKS), (VLO), (YHOO); Finerman's Firm Is Short (IYR), (IJR), (SPY), (IWM), (SPG), (TCO); Finerman's Firm Owns (MSFT) Options; Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm Owns S&P 500 Puts; Finerman's Firm Owns (MDY) Puts And Is Short (MDY); Finerman's Firm Is Short (LEH) And Owns (LEH) Puts; NBC Universal Is The Parent Company Of CNBC