Archive for April, 2010

It’s the Same Old Song…….or is it?

Seems like we’ve been here before so many times! A Wall Street firm allegedly caught with their hands in the cookie jar. Like so many times before, we expect that there will be much banter and threats of justice and retribution but in the end, Wall Street will go back to being Wall Street and Goldman Sachs will be Goldman Sachs.

Well, maybe not this time! There are a couple of factors which I think will make this time different from all the others. First, the overall disdain for Wall Street is at all time highs coming off Wall Street’s role in almost single-handedly destroying not only the US financial system but the global economy as well. In response to the unadulterated greed of Wall Street that plummeted the US into a recession unlike any since the Great Depression, the government is now forced into passing historic legislation that will potentially greatly restrict Wall Street’s ability to satisfy their lusty greed for the almighty dollar. Of all the hated Wall Street firms, Goldman Sachs sits atop as the poster boy of the now hated Wall Street.

Normally, when a Wall Street firm like Goldman has these types of problems, it is with domestic clients. The US Government has much easier time making Wall Street’s problems go away when it is a simple domestic situation. Problem this time is that one of the major accusations against Goldman was how it handled an overseas client…..Greece! The EU is hopping mad at Goldman’s said “indiscretions” concerning their consulting of Greece  and the  aftermath where it shorted Greek debt adding to Greece’s problems. The US Government is not going to be able to “let this one simply disappear!”

Now, with Wall Street being so hated, actually the word was despised per a recent Bloomberg poll, by the general public, i.e. the voter, the politicians finally have a whipping boy that they can beat the hell out of to try to regain the voters trust….the trust the politicians lost shoving the health care bill down the voters throats and that was after they allowed Wall Street to decimate our economy. A large number of incumbents on both sides stand good odds of losing their jobs if they don’t win back the approval of the voters and the only way that will happen is to lambast the only group that the voters hate more……Wall Street and their poster child Goldman Sachs!

The final reason why I think this time Goldman will probably feel the real sting of the whip this time is the testimony in front of the committee which was televised. The Goldman representatives made three major mistakes in my opinion. First, it seemed as though they showed a real disdain for being there and having to answer questions. Second, Goldman’s inter-firm e-mails and other evidence presented against them seemed to bring into consideration the bringing up of criminal charges against Goldman and not just civil charges. Third, Goldman’s representatives avoidance of answering specific questions, stalling tactics, and disruptive behavior really pissed off the committee members and that is really not a good idea.

For these reasons, I am not a buyer of Goldman here, nor any other of the big Wall Street firms. I would not necessarily get short here but it is too early for me to do a little bottom fishing. It looks like $150 is an important level and if criminal charges are brought forth….which what I think is going to happen, I think Goldman will break $150 and get slammed pretty good! Stay tuned for further developments!


I’m Back!!!

I’m back!!!!!!! My site has been on hiatus due to my involvement in some special projects… but I’m back and will be updating things and getting everything back on track.
Let’s take an overview of the market and the economy. It’s a new and same old, same old situation. We now have a new Health Care Reform Bill, economic numbers showing the economy improving, the dollar strengthening and the Market inching up. The same old continues- housing foreclosures continue to rise threatening financial institutions, energy prices are high, global finances weak(Greece)and a worry(we face sweeping financial reform), and U.S. unemployment remains over 9.5%.
So what does an investor do? Be discriminating – use ,options,- focus on areas or companies you are familiar with or that have a record of substantial resources, decide whether you have the time and temperament for short-term investing or need longer leaps to ride out possible ups and down when you can’t watch the market day to day.
Special note: I was a seller of Apple as reported in Wizard and PitBull on Monday(4-26) at lunch  as we saw a major pull back coming. Price/volume divergence was the major trigger but we lucked out with Monday’s bearish engulfing candle close. Nor am I a buyer of financials at this time especially Goldman Sachs. On the long side it is too early.
Let me know how things have been going for you, check out my 3 night webinar and I’ll be back to you soon.