Forget Goldman Sachs; Only Fools Rush Into Stocks
Mar 27, 2012
Is Goldman Sachs (NYSE: GS) playing us all for Muppets when they say stocks now present a generational buying opportunity?
The investment bank’s 40-page bullish report, titled “The Long Good Buy: The Case for Equities,” says to forget the huge run-up since 2009, forget the 25% rise in equities over the last five-and-a-half months, and forget bonds. This party is just getting started.
Are they right? Yes, they are.
Should you heed their advice and sell your bonds and load up the truck with equities? Hell no.
Goldman’s report is like me forecasting increasing dark towards evening. It’s too obvious. Of course stocks are a better buy than bonds in the long run when bond yields are so low.
But there’s this little problem of timing that they don’t address.
If you load up on equities now, and there’s a correction, or worse, a double-dip in major market economies, and you get taken to the cleaners, unless you’re young enough to hold onto your stocks for a generation, you may be done… as in toast.
Right now is not the time to jump onto the bull market. It looks great, I agree. But this creature is getting restless, and coming into the spring, some caution may be warranted.
If you want to get in, have patience. There’s plenty of time, if the markets are presenting a generational buying opportunity.
By the way, they already have had a generational run, and you probably missed it. Did you load up in March 2009? Did you load up in October of last year?
Piling on right now is exactly when the fools rush in. Forget Goldman. You know they fleece their clients. Just because you aren’t a client doesn’t mean they’re not out to use you, too.
The markets didn’t rally on the Goldman report. They shrugged it off as mere public relations, perhaps to defray that conversation about the firm playing its clients like puppets.
What drove markets last week was China. There are increasing worries that the Chinese economy may be slowing more than anticipated. If that is the case, if Chinese GDP growth slows to below 7.5%, global markets will cool down. If its GDP growth falls to 5%, or lower, global markets could crash.
Yes, I mean crash, as in, drop 50% in short order.
I’m not saying that’s going to happen. But if it does, well, you might not want to dump all your government bonds just yet.
Now, about Jon Corzine…