Added To GS

I have added to my position in Goldman Sachs.


PJ said...

Well, a Goldman short represents about 2% of my assets. We'll see. My time frames are much longer than yours, so we could both be right.

Anonymous said...

The earnings have been much better than expected so far. In some cases(intel) they were the best EVER. This market should be much much higher on the results.

So why isn't it???

Are they waiting for apple?

Is the top in?

PJ said...

Anon - The earnings aren't sustainable. This is the peak earnings quarter, because of inventory rebuild and stimulus contributions. Financial earnings which are 35% of total are mostly fake, and the real part will be declining as the Fed MBS program ended and the decline in RE prices resumes. Faked earnings and insufficient loan loss reserves this last year will detract from future earnings. Overall, future earnings won't come close to analyst projections.

If you're more optimistic than me about future earnings and economic growth, I can see arguing that stocks are fairly valued. I have a hard time seeing why stocks should be "much much higher." 2007 is not coming back.

Anonymous said...


Your argument could also apply to last quarters earnings and we were 1000 pts LOWER!! I rest my case.

PJ said...

True ... but the Fed MBS program ended March 31. That's new this quarter. Stimulus makes a declining contribution to GDP in Q2 and a negative contribution in Q3. That's new. The inventory bounce ends in Q2.

If this were easy we'd be rich.

Anonymous said...

Well I'll agree with you there, i'm definitely not rich!