I took a nibble on ICE. Okay, I took more than a nibble.
I started out with about a third of the position size I wanted ideally, given the right prices. However, I don’t think prices are as good as they can get on ICE right now. However, I am reminded of the old Buffett saying: “A good company at a moderate price is better than a moderate company at a good price.” I am also reminded of Peter Lynch’s advice in One Up on Wall street: If a stock you like is too expensive, buy a small position so you can track it, and add to it later if it gets cheap.
So I took a small nibble at first. But I couldn’t help myself. I wanted to put more in – my gut was telling me to. So I doubled my initial position.
I just hope that an international disaster in credit default swaps doesn’t take out ICE’s guaranty fund. That is the risk here. But this source of risk is actually one of tremendous upside as well. Banks hedging risk and speculators are bound to be gobbling up credit-default-swaps on the European debt right now, and as long as massive defaults do not occur, the tremendous volume could be very profitable for ICE.
I own shares of ICE.