Sign inmarkettech's Commentaries
A Message from Louis B. Mendelsohn - President and CEO of Market Technologies
Follow the government money
“Follow the money” is familiar advice for investigators trying to solve a crime or for traders trying to determine where to invest. “The eight hundred pound gorilla” is another well-known idiom.
Now, of course, there is lots of money flowing, but it’s coming primarily from the federal government and not from normal commerce during an economic recession. The government bailed out Goldman Sachs, JPMorgan Chase and other banks last fall, and now they are reporting billions of dollars in profits for the second quarter. Even Citibank is showing profits!
But the government turned down Lehman Brothers last September and, most recently, said it wouldn’t put more money into CIT, leaving it dangling over bankruptcy court. Chrysler and General Motors know the feeling, getting enough money from the government to survive but not enough to avoid expedited bankruptcy proceedings. The end result of those government decisions remain to be seen.
The point is that the federal government, like it or not, holds the key to the future of individual companies and even entire industries. The government wants “green,” universal health care and a number of other items on the Administration agenda that could change the business and economic landscape for decades.
If you are a serious, long term investor at this time in U.S. history – or if you are simply a short term trader looking for a quick profit – you should keep a close eye on where the government is directing its funds and follow the money.If you don’t, and get trampled by the eight hundred pound gorilla in the room, it won’t be a pretty sight and you’ll have no one to blame but yourself.
Tags:messages-from-the-ceo
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