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Something's Wrong
Old 06-14-2006, 02:10 AM   #1
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Something's Wrong

"shares of Goldman Sachs fell almost 4 percent, to $139.25, after the company reported that its profit more than doubled, and Lehman Brothers, which reported a record profit on Monday, fell 4 percent yesterday, to $59.42, after dropping 5 percent on Monday.

"It's one thing if you make mistakes and the stock goes down," said Mr. Black, president of Delphi Investments, "but when you are shooting the lights out and the stock is getting drilled every day, that is a bear market."
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Re: Something's Wrong
Old 06-14-2006, 04:52 AM   #2
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Re: Something's Wrong

When the market wants to go down "good news" is bad and "bad new" is even worse. The spin I heard was "investors are concerned that the unexpectedly good earnings will not be able to be sustained." In a few days the "investors" will suddenly realize the new P/E and jump on it like.....
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Re: Something's Wrong
Old 06-14-2006, 06:39 AM   #3
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Re: Something's Wrong

that's the best kind of drop in stock prices - one where the fundamentals haven't changed but the price drops. It's just going on sale. When you buy the stock, you're getting the same thing, just cheaper.
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Re: Something's Wrong
Old 06-14-2006, 11:06 AM   #4
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Re: Something's Wrong

Quote:
Originally Posted by boont
"shares of Goldman Sachs fell almost 4 percent, to $139.25, after the company reported that its profit more than doubled, and Lehman Brothers, which reported a record profit on Monday, fell 4 percent yesterday, to $59.42, after dropping 5 percent on Monday.
Nothing wrong with taking a profit.

Especially near the end of a seasonality quarter with options expirations and other volatility-enhancing events influencing investor emotions.
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Re: Something's Wrong
Old 06-14-2006, 11:23 AM   #5
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Re: Something's Wrong

Quote:
Originally Posted by 2B
The spin I heard was "investors are concerned that the unexpectedly good earnings will not be able to be sustained."
Lets see...a quick pass through the spin degenerator says the real answer is:

"We dont know"
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Re: Something's Wrong
Old 06-14-2006, 12:55 PM   #6
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Re: Something's Wrong

Quote:
Originally Posted by Diaper Bunny
Lets see...a quick pass through the spin degenerator says the real answer is:

"We dont know"
So that sounds like a BUY BUY BUY! to me. Or are you saying sell sell sell!?
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Re: Something's Wrong
Old 06-14-2006, 04:20 PM   #7
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Re: Something's Wrong

Oh, its "buy!"...just probably not now.

I'll put you on the "buy!" notification list right behind dantien if you'd like!

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Re: Something's Wrong
Old 06-14-2006, 04:29 PM   #8
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Re: Something's Wrong

Quote:
Originally Posted by Diaper Bunny
Oh, its "buy!"...just probably not now.

I'll put you on the "buy!" notification list right behind dantien if you'd like!

That's ok. I've got my own predictive indicators I look at. They are 100% correct. It's just that timing is an issue. They are only reliable to +- 1 day unfortunately.
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Re: Something's Wrong
Old 06-14-2006, 04:33 PM   #9
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Re: Something's Wrong

I don't think the issue with Goldman relates to the market as a whole.

GS earns an increasing % of their profits from proprietary trading. They aren't required to disclose many of the details about this trading and the potential exposures it creates.

This makes it a very hard company to analyze, and therfor makes their spectacular profits less so.

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Re: Something's Wrong
Old 06-15-2006, 03:19 PM   #10
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Re: Something's Wrong

Quote:
Originally Posted by justin
That's ok. I've got my own predictive indicators I look at. They are 100% correct. It's just that timing is an issue. They are only reliable to +- 1 day unfortunately.
CFB,

My predictive indicators reveal that yesterday, 6/14/06 would be a very good day to get into the market. Hope that helps some. Your welcome in advance!
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Re: Something's Wrong
Old 06-15-2006, 04:43 PM   #11
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Re: Something's Wrong

Just wait until next week. You might change your mind...
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Re: Something's Wrong
Old 06-16-2006, 02:44 AM   #12
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Re: Something's Wrong

Could you say this was a case of buying on the rumor and selling on the news?

I’ve been doing a lot of reading about why and when the “Smart Money” on Wall Street buys and sells. Looking back at the last week or so I came up with some reasons why they would have been concerned about future revenue streams. I would be interested to hear what some of you think of my attempt at analysis.

GS is divided into different philosophical camps, like the bankers vs the securities guys. A lot of their profits in the past year have been from the securities side of the house. But, the ability to keep that going in the near future had some doubt cast on it Monday when Lehman’s announced their quarterlies with some qualifiers. Basically, they said last quarter was the easy one for equities, but the next one is going to be difficult to predict. About 60% of GS’s profits right now are coming from the trading side of the house. GS started falling that same day, as did Lehmans.

Specific to Goldman Sachs is the fact that their CEO is leaving for Treasury and the President, Blankfein, is moving into his spot. That’s not the big worry for the “smart money” as much as who Blankfein’s replacement is going to be. What philosophical camp the new president comes from can have a dramatic impact on what the company’s philosophy on doing business will look like.

The banking side of the house had a decent year but there have been a few bumps in the road. They’ve never had a problem paying debt, but they’ve also never had as high a debt to equity ratio as they do now. Again, something to be concerned about. A few more bumps in the investment banking side and a crappy quarter for the market investors and who knows what might happen. Like Saluki said, the securities side of the business is a little murky to start with and when their competition starts pointing out that the easy day was yesterday the future gets even murkier.

So, simply put I think that the wall streeters look at GS and see a company that has raised its dividend by 40% in a year and now the revenue stream that supports that is possibly threatened. It may not be a credible threat, but there is a blip on the radar screen so to speak. They don’t want to be left holding the bag if everybody else bails so they move out of their positions.

The way I see the so-called smart money guys is that they’re like a couple of gunfighters in the old west. Each trying to anticipate the other guy’s move so they can try and beat him to the draw and pull the trigger first. For us long term kind of guys it can be unnerving, especially when you’re trying to move in or out of a stock. But the rest of the time the smart money crowd is just an annoying noise that we have to put up with.
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Re: Something's Wrong
Old 06-16-2006, 09:55 AM   #13
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Re: Something's Wrong

The analogy works until you reveal the truth that very few gunfights occurred the way they're shown in the movies. When they did, usually both guys died. Maybe thats the punchline.

Very few of the big name gunfighters engaged in many gunfights, and almost all of them were shot in the back at some point. Thats a good punchline too.
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