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Goldata Financial
Dedicated to
above average returns in the stock market.
STOCK MARKET COMMENTARY
February 23,
2009
From Elliot
Goldberg, Registered Investment Advisor, Goldata Financial
Last week, the Obama administration was introduced to the vigilantes of Wall
Street. In case you don’t remember them, they last appeared in the bond
market during the 1980’s, when inflation was rampant. They attempted to
apply discipline by beating down the Treasury market any time Congress would
hint of policies that were inflationary, like a petulant child crying in a
toy store. This time they focused on equities and the banking stocks in
particular, beating them down without mercy. Their goal was to get the
administration to show their cards, which hopefully did not have the king of
nationalization among them. Even previous protectorates like J.P. Morgan
(JPM) and Wells Fargo (WFC) were trading as if Monday morning might bring word
that their common equity (and maybe more) would be wiped out. As the weekend
approached late Friday, the vigilantes increased their selling pressure until
White House Press Secretary Robert Gibbs came out and meekly hinted that the
administration’s goal was not the nationalization of the banking system.
Like the child that was rewarded for their bad behavior in the toy store, the
vigilantes then stopped crying and bought back these same financials,
reducing losses for the week to painful levels, from the obscene. It’s
clear to this pontificator that the market action over the last few weeks
shows that the dire financial situation has been discounted and that Mr. Market
is screaming at the administration for a set of final plans – good, bad
or indifferent – so that he can handicap the winners and losers and
proceed. Until then, the vigilantes are in control and will continue their
tantrums until the administration reacts, a good thing. Positions in gold and
health care continue to work as portfolios have gotten nicked, but are
significantly outperforming market averages. A large rally is out there and
the administration’s willingness to appease the vigilantes means it is
now nearer, rather than farther.
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