NEW YORK (TheStreet) -- If you've ever made a speculative investment and underestimated the risks, you're in good company. It's somehow comforting to small investors to realize that betting on an economic recovery or the winds of change in the economy can entice even "The King of Wall Street."
JPMorgan Chase (JPM) admitted Thursday they incurred $2 billion in losses when an enormous trading gamble using Credit Default Swaps backfired.
|JPMorgan Chase CEO Jamie Dimon|
Like many investors, JPM has been buying corporate bonds in a bet that the economic troubles in the U.S. and around the globe would cause those bonds to soar in value.
Fresh Look at BanksSo how does this boondoggle present opportunity? Let's look at the one-year chart of the Financial Select Sector SPDR ETF (XLF). The top 10 holdings comprises a "who's who" of the financial services sector including JPM, Wells Fargo (WFC), Berkshire Hathaway Class B (BRK.B) and Citigroup (C). From late November 2011 until April 2012 the XLF made an epic move higher, outperforming even the most optimistic forecasts. It still trades well above its 200-day moving average. It could correct another 8% and still be above the 200-day average price.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV