Newbies: Step Right Up For a Little Wall Street 101
- Posted by chicagosean
- on June 22nd, 2012
There appears to be a new paradigm on Wall Street where a “generation” is now measured in weeks.
- On March 21st of this year, Goldman Sachs issues a report titled “The Long Good Buy” in which they make the case:
“The prospects for future returns in equities relative to bonds are as good as they’ve been in a generation.“ [emphasis mine]
- On June 21st of this year, Goldman Sachs recommends to clients to build short positions in S&P 500 stocks due to the “weakening domestic economy.”
So there you have it folks, a generation in Wall Street Analyst time is now a whole 12 weeks.
Let me tell you what likely really happened.
On Tuesday of this week, the S&P had a nice little breakout going with lots of stocks breaking out of bases. This rally looked promising. But due to the scary nature of the markets recently, the godly folks at Goldman Sachs probably didn’t like the amount of long exposure they had on the books. Wednesday was a Fed day, so there was hope that the markets would get a little screwy and therefore the equities desk at Goldman waited patiently for the market to come in. But they were mostly disappointed. Faced with the reality that the market was showing real signs of melting up, Goldman employed the best tool they’ve got to get what they need: Their reputation.
On Thursday morning, the upstanding and forthright citizens of the Goldman Sachs equities desk placed a phone call to the newly entrusted summer interns in the analyst department and politely asked them that they suggest to Goldman’s clients that now might be a grand time to sell stocks and get short.
Fast forward to the 9:30am Eastern stock market opening on Thursday. The markets begin a slow-grinding downward trend that persists straight to the closing bell. Why not a rapid and vicious sell off? Well, my friends, you can likely thank your counterparts at Goldman Sachs – with your best interests at heart, of course – who stealthily employed the greatest features of anonymity that the best dark pools can offer to sit on the bid and absorb all of your panic selling. Providing us all cushion and comfort so that we could exit our risky positions in an orderly fashion. Such upstanding men, these Goldman Sachs guys.
Well sucka…. you’ll be buying your positions back from these same model citizens. At much higher prices.
Step up Sucka
Understand? Don’t you know that I’m THE MAN?
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Sean McLaughlin - Editorial, Curation, & Investor Relations Solutions at StockTwits. Also, former Member of the Chicago Board of Trade who trades his own account in Boulder, Colorado. More »
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