Interesting that on Mar 22nd an article came out penned by a GS strategist arguing for the long side of stocks and for being short bonds.
The Dow, at that point, was hovering at 13,200. Since that article, stocks have dropped 550 points, capped off with today’s trade down at 12,648.
The broader S&P posted a high at 1422 at that time. Today? Try 1357 for today’s low or 65 point hammering.
I just think its ironic that Goldman puts out a huge buy story and we melt. I don’t see how if clients bought on that recommendation, they have had a 4% plus haircut, assuming they bought an index fund. If they bought a fund with the wrong weighting, it could be worse or better. But I am using the bench mark assuming they had something similar to a spider or a diamond. Throw in the commission they paid if it was a load fund, and the are already underwater to the tune of at least 5 to 7%.
I don’t think it was a coincidence that GS put out a bullish letter. Who do you think sold stock to all those who read that article and took the plunge back into the market?
Ok, I think you get my point.
That being said, what are some good levels to try to buy on this dip? 1338 followed by 1312. If we ever were to have a panic push down to 1300, I think that’s a level you really take advantage of. As for Dow futures, look at 12,635, 12,445 and then 12, 255. A break down to 12,000 would be a gift as well to buy, in my opinion.
Mark my word, that price level will doubtlessly con incide with calls for investigations into the activities of speculators. Speculators are bad when they make food and oil prices go up, and also bad when they make stock prices go down. This is the calculus of stupidity, fear and ignorance that the tv news anchors and politicians use when they need to fan the flames of panic and fear into a crisis they can “investigate” or “fix”. Be ware when that happens.
An interesting aside, recently there has been talk about nat gas as a fuel for the future. The USA has been called the Saudi Arabia of nat gas. Nat gas is at a 10 year low in price, due almost entirely to the new techniques created to get it out of shale rocks. Rightly or wrongly, this fracking technology has freed up an immense amount of nat gas which once was trapped for ever in rock. This technology trend has produced cheaper nat gas. The ‘greedy’ nat gas drillers have, in fact, driven prices to 10 year low… Why aren’t there calls for investigations into speculators now?? Trading volume is just as high, if not higher than it was back then. I would imagine that most of the traders 10 years ago are still trading the same products, probably at the same or even higher volume.. Why are they not being vilified?
Watch the movement in oil prices now. Back in December we were at 93.00 a barrel. We spiked up on Iran/Israel fears, all the way to the 111 level. (ironically, exactly the same time the stock market was trading up at its highs of 13,200 and the S&P was above 1400. Go back to October of 2011 and oil traded down to 76 dollars a barrel, while at the depths of the recession, Feb of 2009, oil traded down to 59 bucks.. No congressional investigations then. No talk of evil speculators then…
I write this just to point out the following rule i follow.
1) Big media and big politicians are always, always, always a force to fade.
2) Its very hard to keep one’s head and head the other direction when you are watching “experts” like, oh, lets say some highly paid analyst from Goldman, telling you one thing. When in fact, that analyst probably has a vested interest in a sales pitch, which in the end, will allow him or her to move product to you or through you some how. This latest example I cite is a perfect example.
Just food for thought. I will be watching TV for the next wave of fear mongering. At that time, I’ll be asking you to hold your nose, wait for the cold water, and do what feels wrong. That’s the only way in the end, you can out perform the herd. You can’t be running into the water with the herd. There are big alligators waiting there to help you across. I’ll be sitting on the sidelines, waiting to cross after all the big gators are so full, they won’t even look twice at me when I decide to cross. That’s how you survive in the wild, and I think its a good analogy for investing.
