RKT and ASPS Hedge
Hard to speculate potential profit targets for either of these , It's easy to say RKT will be back up around $30 at some point in the near future though. I like RKT and I personally see a lot of upside potential . However , the default rates on mortgages are up considerably at this time and the future of the world economies is uncertain . On one hand, the interest rates will likely stay quite low for the coming years and that will help to fuel new mortgages and growth. At the same time , we also need to see GDP go up and unemployment rates remain acceptable to help defend against a continuation of rising default rates and a possible spike in mortgage foreclosures . I personally am really uncertain about what will happen . So , I have decided to hedge my position of RKT with ASPS.
ASPS , in short, does well if there are higher rates of foreclosures , basically the opposite of RKT. Look at ASPS's historical performance after the 2008 real estate crisis . It is possible that we could see a similar scenario play out going forward .
At this time, ASPS is also available at a fairly low price based on their potential and price history. ASPS is not in the best of shape at this time, they have lost their foreclosure related income due to government restrictions on foreclosures and currently have negative EPS (TTM) of $-22.11. Eventually, the foreclosure protection will have to end and I think this is an opportunity to buy ASPS at a signification discount. Therefore I have hedged my account by longing RKT and ASPS with equal position sizing (dollar amount).
I think we need to be patient with this one though . I see ASPS as a 5 year hold , as for RKT I think I will consider swing trading based on the chart patterns , my first TP will be around $35 but I will wait for signs of a reversal before I sell and get back in on the following dip.
Good Luck , Stay balanced ~
ASPS , in short, does well if there are higher rates of foreclosures , basically the opposite of RKT. Look at ASPS's historical performance after the 2008 real estate crisis . It is possible that we could see a similar scenario play out going forward .
At this time, ASPS is also available at a fairly low price based on their potential and price history. ASPS is not in the best of shape at this time, they have lost their foreclosure related income due to government restrictions on foreclosures and currently have negative EPS (TTM) of $-22.11. Eventually, the foreclosure protection will have to end and I think this is an opportunity to buy ASPS at a signification discount. Therefore I have hedged my account by longing RKT and ASPS with equal position sizing (dollar amount).
I think we need to be patient with this one though . I see ASPS as a 5 year hold , as for RKT I think I will consider swing trading based on the chart patterns , my first TP will be around $35 but I will wait for signs of a reversal before I sell and get back in on the following dip.
Good Luck , Stay balanced ~
艾力克~
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