“We issue this highly qualified forecast on the basis of poetic irony…and not much else. Last week, Morgan Stanley analyst Betsy Graseck scorned the shares of Citigroup as Morgan's No. 1 short sale recommendation for 2008.
“Morgan's recommendation to sell short Citigroup shares arrived on a day the stock closed almost 50% below its all-time high. Throughout Citi's slow-motion collapse of the last 12 months, Morgan steadfastly maintained some version of a ‘Buy’ recommendation on the stock. In fact, as the nearby chart illustrates, Morgan reiterated its favorable forecast for Citi several times during the stock's drop from $57 a share last December.
“If Morgan's advice was so misguided during Citi's collapse, would the Fates and Furies of the financial markets permit Morgan's advice to be timely and accurate now? Not likely. To the contrary, Ms. Graseck's ‘sell short’ recommendation feels an awful lot like a contrarian ‘Buy’ signal.”
Therefore, we should not take the recommendation by analysts to sell short any financial stocks at current price. Because big money are continuously pumping into the US bank.
UBS, Citigroup, Bear Stearns, Blackstone, Morgan Stanley and now probably Merrill Lynch -- all handing over massive stakes in their businesses to funds controlled by foreign nations. The Free Market Investor’s Chris Hancock has composed a report on the effect of these sovereign wealth fund investments… read it here.
4 comments:
I am a little in doubt that the financials have bottomed but I am not going to shot it either. It just doesn't seem bad enough - none of them has failed or nearly failed (talking about major players here). With the credit market getting tighter and Fed cuts in a slow pace, I just can't see they turn around on a dime. GS is the only one that doesn't have a cash problem. I do think it might be due for a short term bounce though.
One big part on sovereign investments is that they buy preferred with very favorable terms, which is very different from the common stock. Also they tend to have a very long term view and political consideration which are different from individual investors that only want to turn a quick profit.
What is your personal opinion?
Anyways, wish you a merry Christmas and happy new year.
Oh, by the way, I do have some small long position on a couple of financials though. Not looking to add any time soon.
I would like to wait for sometime before going long:)
Yeh, I know what you mean.
It seems though I would follow the stock much better with a position even a tiny one. Maybe cause I am kink new.
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