Another Example of Why “Buy and Hold” is Dead
Apr 22, 2009
Posted by Jody Eisenman | Filed under fraud, Uncategorized
As I wrote yesterday,“since there is very little correlation from day to day on Wall Street nowadays, tomorrow could be radically different”. Remember Vornado and Simon Properties that were down about $6 each yesterday? Well both were UP about $6 today. Bank of America (BAC), which got crushed yesterday, opened today at $7.23, and closed at $8.75. C opened at $2.70 and closed at $3.24. When I started as a broker in 1984, a 15% gain for a stock over the course of a year was considered to be an acceptable return on your money. Many of these stocks now make these moves in a day. The funny part is, there really wasn’t much news to account for these swings. It seems that almost every day, some prominent analyst or some government official will make a comment that will move stocks dramatically. Today, Geithner reassured everyone that banks have several avenues available to them in order to raise capital if needed. I don’t consider this to be very significant. Why not? Because banks are only going to raise money from investors when the investors feel that the potential return more than justifies the risk. Geithner has no control over this, other than his “private/public partnership” which is still in the planning stage. If a bank “fails” the stress test (which is due to be made public in two weeks), they will be forced to either get more government money, or go under. You can structure the government assistance any way you like, it’s still a handout. This situation has not changed in the last several months.
Meanwhile, the short term traders continue to rule the equity markets. It is an exciting time to be on Wall Street, as stocks and bonds continue to make wide swings on a daily basis. As a bonus to all my blog readers, I will be offering a free report in the coming days. Stay tuned for more details.
