Sell USB Capital VIII (USB-PG)
Shares of USB Capital VIII (USB-G) — what I’ve called US Bancorp, which I preferred for the sake of simplicity — have crossed above my $18 target price (for February 2010). I’m going to take my profits here with this strategy in mind. I think we’re in the midst of a bottoming process for the stock market. I expect we’ll get a reversal of the current rally sometime relatively soon as part of that process. Right now too many sectors are pressing up against resistance levels (like the 200-day moving average) for me to feel that the short-term risk/reward ratio favors risk-taking. Once we get that correction (if we get that correction) and take some of the risk back out, I’ll look to put this money to work in the financial sector, quite possibly in a common stock with more upside than a preferred issue has. I’m selling this position with a 17% return (including dividend) since I added it to Jubak’s Picks on Feb. 10. (Full disclosure: I will sell my personal position in USB Capital VIII three days after this column is posted.)
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