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Goldata Financial
Dedicated to above average returns in the stock market.
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STOCK MARKET COMMENTARY
March 2, 2009
From Elliot
Goldberg, Registered Investment Advisor, Goldata Financial
Last week, we learned that we working Americans better start studying for the
Civil Service exam, as government jobs seem to be the only ones that will be
available shortly, if the Obama administration has its way. The employees of
Sallie Mae (SLM), the private student loan lender, will sign up first as the
next year’s budget proposal would eliminate their lending functions, turning
them over to the Federal government. Also warned were the researchers currently
working for the drug companies as the administration will now consider drug
importation to reduce prices. While we all would like to pay less for our
prescriptions, without the ability to recoup the investment in searching for
new drugs, drug companies will be reluctant to fund research to look for new
ones. However, the government-run NIH will be funded, if not expanded, and
certainly these researchers can apply there (sorry, no stock-options
here). Employees of the banking
sector, and Citigroup (C) in particular, can breathe a little easier as the
previous week’s concern of an equity/debt wipeout and a government takeover
were dashed by Fed Chairman Bernanke Tuesday, the only good news of the week.
The fundamental news continued to be awful – unemployment up, GDP revised
down, earnings misses – but Mr. Market reacted to none of it. As discussed
last week, the administration’s reluctance to stop making/changing policy has
led to downside action by the now empowered vigilantes, who would be happy to
commit their capital, if only the rules of the game were stable. In managed
portfolios, gold positions retreated a bit and biotech/health-care positions
were stopped-out after the aforementioned assault on drug companies began
(they finished an additional 7-13% lower). Hefty cash positions left
portfolios nicked, but nothing like the market average’s performance.
Technically, the S&P500 finished at support levels where we’ve bounced a
couple of times. I would normally take solace in this event, however, it is clear
that Mr. Market will continue to complain (go down) until the Obama
administration “gets it” and stops changing the rules. When this happens, and
it will, it will define the market’s bottom and I’ll get more aggressive.
Until then, tight stops continue with patience required.
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