E-Trade Woes Help Schwab Stock Hit Multi-Year Highs
E-Trade’s (ETFC) subprime problems have caused the stock to lose over half its market cap this week. The stock dropped nearly 60% on Monday and as of today the company is only worth a measly $2.36 Billion. As a result E-Trade’s competitors have received a share price boost, with Charles Schwab (SCHW) stock hitting new multi-year highs.
Yesterday SCHW closed at $23.96 as you can see from the stock chart below:
What does this mean for Schwab moving forward?
With the market looking gloomy at best it is very nice to see Schwab’s stock price holding up so well. Taking a position now and buying into this latest move may not be a bad idea. Place a 5 - 8% stop loss as insurance and hold on to see how the stock performs in the coming months. A good initial target price would be $25.88, which is 8% to the upside.
As of 2:21 PM EST SCHW is down $.01 on the day, trading at a last of $23.95.
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Blain, how did you calculate the target price? Did you simply take 8%? Or are you following Fibonacci rules?
Simply took 8%
No reason either for 8% versus any other. Just figured around $25 would be a good initial target, and once reached you could bump up your stop loss. With the market where its at conservative plays are more on my mind.
Does anyone know if it’s dangerous to have money in a company like etrade that is experiencing significant financial troubles? I know my money is FDIC insured, but I’ve never been through the process of an institution going bankrupt and what it takes to get my money back if that happens.
It’s got me very worried.
I’m not sure, but I bet the uncertainty of the situation would make other’s want to switch accounts. Maybe making good plays for other brokerages.
That is a great question. I think the funds are insured but the big question is by WHO? if the company does go bankrupt, who pays ya? Probably will be a lot of people closing their accounts and switching to competitors for sure.
Well they are insured by SIPC. My question is really how much of a hassle is it if they were to actually go bankrupt? Would I need a lawyer just to ensure I get all my money back. And while we’re on the topic, does anyone know about any SIPC insured brokers that have gone bankrupt?
[...] Blain at stocktradingtogo.com locked in a nice gain on his Schwab trade. [...]
If I were you, I would pull my money out asap. Even if you can get it back and they are insured, the customers are going to be one of the last in line to get reimbursed. Every major bank they have debt with will certainly supersede. In addition, even if I’m wrong, I’m willing to bet a lot that it’s not some overnight process to get your insured funds back in your pocket from the SIPC.