Morgan Stanley says sell stocks - should you?
Filed under: Economy, Investing
Was the recent run-up in the stock market a sign that stocks have hit rock bottom, or a suckers' rally which raised the hopes of investors naive enough to think that good times were coming only to shoot them down like a nerdy guy at a dance club?Judging from today's300-point decline in the Dow Jones industrial average, it seems that the pessimists carried the day. Worries about Treasury Secretary Timothy Geithner's comments about banks needing additional capital and lingering concerns about a potential bankruptcy of one or perhaps even two automakers certainly did not help matters.
"When you're looking for excuses to sell off, certainly those sorts of things are realistic worries. We may well go back and test the lows." said Bruce McCain, chief investment strategist at Cleveland-based Key Private Bank, which manages $22 billion, in an interview with Bloomberg News.
"In the rush to buy a cyclical recovery, it seems earnings or valuations no longer matter," Todd said in a note to clients. "We simply do not believe that the market has completely priced in the prospect of further earnings weakness or that it will, without interruption, look through this weakness to recovery."
Some investors believe that Todd's view of the market is too pessimistic.
Hank Smith, chief investment officer of Haverford Investments, told DailyFinance that investors expect corporate profits and the economy will remain weak.
"We think that it is more than adequately priced into the market," Smith said. "In our view we are starting to see signs that we are at or near the trough of the economy. We think that its reasonable that we will see positive GDP numbers in the fourth quarter."
Investors punished the stock market because they were disappointed by what they saw as a slow pace of action from the Obama administration. But Smith pointed out that the market does move when there is an announcement of a new policy.
"The earnings reports for this quarter are already going to be horrific but that was priced in the market," Smith said. " There is definitely still a fair amount of fear."
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Reader Comments (Page 1 of 2)
3-30-2009 @ 6:28PM
steve phillips said...
These so called experts amaze me. I have been a financial
consultant for almost 30 years and these experts who
live in their multi-million dollar homes and have a company
vehicles take them to work everyday have no clue how the
true working economy of america functions. You are looking
at 1 to 2 million more foreclosures, increased job lay-offs, negative psychological factors and you think the economy will get better in the 4th quarter of this year. You morons
are the reason we are here in this mess in the 1st place.
Reply
3-30-2009 @ 8:04PM
ALBERT GUSMAN said...
i agree with your comments.
3-30-2009 @ 9:37PM
rholmes said...
right on brother, all of the fundamentals are not there for this market and economy to stablize..
3-30-2009 @ 11:05PM
New York Investing Meetup said...
You are correct that Wall Street strategists don't have a clue and this is even truer of the dim bulbs that run the government in Washington. HOWEVER, the government is pumping money into the economy like no tomorrow. The Fed has finally admitted it is printing new money (please note that the term 'finally admitted', that is the only thing that happened recently). Printing new money is a very effective way to revive even the most disastrous economy. If you check history, you will see one of the best economies of all time was in Weimar, Germany before the hyperinflation hit and completely devastated it. Money printing first shows up in the economy and only later in devastating inflation. While the economy may not revive by the end of the year, it is likely to become good at some point. And that is when you should really worry.
3-30-2009 @ 6:37PM
Don Dressler said...
Who do you believe? I have watched cheep stocks go up fast to draw the suckers in, then turn around and go right back down. Another sucker.
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3-30-2009 @ 6:40PM
toogeorge said...
Somebody remind me how many economists with Morgan Stanley, or at large for that matter, predicted this recession and stock market collapse a year ago?
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3-30-2009 @ 7:28PM
Hal said...
Nobody can make a certain prediction. Nobody!
THX.
Reply
3-30-2009 @ 7:29PM
Rick said...
Steve is on the botton. We aren't even close to the "real" unemployment figures. The only thing that could impact the reality is the LIBERAL PRESS. If they continue their "Lovefest" and do not report the truth, the preception of a bottom will convince the "followers" that the bottom did happen. Then everyone will be in REALLY DEEP TROUBLE..
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3-30-2009 @ 7:54PM
Simple Jack said...
I would like to think that the worst is over but from what I can see the horizon still looks cloudy. Even as unemployment is approaching (real) 19% that still means that 81% of the work force is still working. I would hate to think this a plan to make our manufacturing base comparable in wages to the rest of the world. A little pain now will pay off later, hopefully. The Peak Oil issue is troublesome and could be the joker in the deck that poisons the well.
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3-30-2009 @ 7:57PM
Frieda said...
Told ya, it was a bear market, not good. And to think, the banks made money off it !! Way to go again Obama and Geithner !
Reply
3-31-2009 @ 5:06PM
cchick said...
obama you certianly mean bush who got us here
3-30-2009 @ 9:13PM
Dennis Farnik said...
I've watched this economic downturn very carefully as I'm little stock investor. When the market goes up, everyone gets on the bandwagon with optimism and when it drops like today, then all the "shorts" and negative people jump ON the bandwagon trying to induce it DOWN to suit their own platform! NO one KNOWS FOR CERTAIN if we have reached a bottom or precisely when the recession will end as we ALL have our OWN AGENDA. So, just use common sense, become VERY INFORMED and then make your best decisions! Remember, buying begets buying and selling begets selling!!! No one wants to be left with "egg on their face."
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3-30-2009 @ 11:43PM
New York Investing Meetup said...
I always walk away from the market when everyone is buying and I frequenly buy when everyone else is selling. I have found this to be a very profitable approach to investing. There are a number of stocks in the market that are at amazing bargain prices. Are they all going to go to zero? If they do, we will all be living in caves and you you will have a lot more to worry about than your stock portfolio. I bought some stock today.
By the way, I run a volunteer investing group in New York with over 2000 members. We have made money in the market during the entire Credit Crisis while the average portfolio was cut in half. How have we done it? We basically pay NO attention to Wall Street opinion or the financial media pundits.
3-30-2009 @ 8:44PM
Xlimey said...
The basic reason the market is os volatile is due to computer trading. Day traders can make a fortune in 1 day by buying low and selling higher and because they are sitting at a keyboard they can bail out in seconds if they make a bad guess. Also mutual fund managers need to get out of cash and make short term gains in order to claim bragging rights and attract more retail investors. If they remain in cash for more than 1 quarter then their fund is history.
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3-30-2009 @ 10:32PM
Joe said...
The government has been overstepping its' authority for some time now. Nullification may be the only answer. Get your state to adopt a sovereignty resolution. 31 states already have. Go to the Tenth Amendment Center. In Florida go to www.gopetition.com/petitions/florida-sovereignty.html
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3-30-2009 @ 11:34PM
Gregg said...
First, no one knows exactly what the market is going to do.
I also worked in the financial market, and people constantly asked me what the market was going to do. I could make predications and that was it. Some came true and others didn't. I told them if I knew exactly what the market was going to do I would corner it and live somewhere on an exotic island. If these individuals on this blog are so sure about the market, put your money where your mouth is.
I have always said that if financial advisors were so good they wouldn't have to continue to give advice. They too could corner the market and just retire.
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3-30-2009 @ 11:40PM
checkers said...
The market has not come close to hitting bottom. The G-20 will wrangle with international banking controls and the U.S. will fund a great deal of this NEW WORLD ORDER. The wild card is the general public that is unemployed / angry and ready to take matters into their own hands. Granted it will be distructive and not productive, but it'll sure bring down the wealthy and our goverment is not in a position to fight overseas battles and a civil unreat in their front yard.. Just wait and see, you'll be mad as hell also....
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3-30-2009 @ 11:57PM
Doug said...
Where are all those A-hole BO supporters that were throwing the 500 point gain as the end of the bad times?
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3-31-2009 @ 12:05AM
Doug said...
This explains it all. Youtube "Obama Deceptions".
Reply
3-31-2009 @ 1:04AM
ron said...
We're in deep shit for the next 4 years. I hope everybody is ready to let your government give money to welfare bastards, and more people are going to be out of a job than you've ever seen before. I hope you're ready to fight for your rice and beans. Just wait and see.
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