“Buy Low. Sell High. And don’t get them confused!” There are few more important rules for investors. I’m struck once again by the faithful Pavlovian response of those who were hating stocks as they dipped briefly into Bear Market territory and now, after a 14% gain (in the S&P 500), are waving their bidding paddles and fanning their short-term gains.
This rally has occurred over the past three weeks when earnings reports have been mostly solid, but none of the macro headwinds have changed much.Europe is still promising a solution and the US is a month closer to a budget deadline for the Group of Twelve. Keep in mind that the EU leaders are promising a plan to alleviate the immediate financial crisis that is Greece, but we remain fractions away from crises in other European countries, including Italy, Spain, Portugal and Ireland. The European bank exposure to these impaired sovereign credits is vastly greater than similar exposures at US banks. But, the US banks will certainly suffer from any European default.
We are all Europeans now.
Former Goldman Sachs Director Rajat Guptais in Federal custody today over accusations he passed inside information to a money manager friend. Bravo to the regulators who may connect culpability with consequence and set an example to others. There will be fewer mini-Madoff’s if the original is paraded behind bars wearing handcuffs and an orange jumpsuit. Shame on you, Rajat.
A report from the Congressional Budget Office says the rich have gotten richer. According to the CBO, from 1979 to 2007 the average household income for the country’s top 1% increased by 275% (adjusted for inflation) while middle class incomes increased by less than 40%. The recognition of this disparity is the driving force behind the Occupy Wall Street movement.