Thursday, November 6, 2008

Goldman Is The New Cisco / Microsoft

I think it's safe to presume that Kid Rock and Bob Seeger (two of my personal favs and both Motown boys), have a combined net worth greater than F and GM. Just unimaginable that this crap is happening, but I'm not surprised and neither should you.

I was thinking about Goldman as I watched it trade this week when it really did hit me. GS is baked, cooked and finito for good. I thought back to the days of CSCO and MSFT and how long it took me and others to realize that they were finally just mature commodity businesses with no edge other than their own enormity. The hot product intros' were done and they just existed as behemoths. And they will be behemoths going forward, but other than the occasional strategic acquisition they are just great companies with no major alternative growth strategies, and that's OK. Still the bluest of blue chips.

But now I look at GS and think similarly. Gone are the days of brilliant new product introductions (sub prime, CDS, CDO and alternative strategies are cooked.) Even prop trading, their biggest revenue source is rumored to be closing. M&A has vaporized and none of us will be "bellying up to the bar" for that hot IPO anytime soon. Bottom line? The revenue model has vaporized along with all the glory of what was the number one, premier institution on the planet. God I would have loved to work there. It's now like a Commerce bank. You can't buy your socks where you buy your stocks like the old Sears/ Dean Witter merger (what a disaster that was), but you are now dealing with a broker neatly folded into a bank. Now they have to play by the rules that banks play by and it's not as profitable. It's a bank, a boring bank. Tight margins and I see 60's in the name.

So like the herd on Wall Street that wondered why CSCO and MSFT weren't "hot" anymore, I say there is not much to wonder about at all. Just finished. Sad

Tomorrow we get the unemployment report and I covered/sold all my positions. Iam flat. I covered my CMI short that gave me over two points today and CSCO was covered as well. CSCO just bored me, although profitable. I day traded SMN today about five times and it was very profitable. My overnight holds from Monday and Tuesday of SMN and FXP were sold at ridiculous gains. I was dead right this week and about 1000 points in two days for any bear is enough to go catch a deep breath. I actually bought a little UYM that I am long (I forgot that one) just in case, as the materials have been bludgeoned like a baby seal.

I am convinced that the market is going to retest and maybe break the October lows but am being cautious into the number. The number will be bad, but how bad? I don't really care because future numbers will be much worse. Any rally tomorrow and I will release the hounds of hell again. When the Fed forgives all mortgages, credit cards and car payments I am getting 100% long. Don't laugh.


T.C.B. said...

I am with ya...
I also think the market will fall through the low like a Batman diving from the skyscraper.
It will be brief but horrifying, I reckon...
In the mean time the market seems to have a ton of whipsaw to wear out and empty out unsuspecting bulls and bears...
Happy trading!

YoungChuck said...

I have been having the same feelings about GS and yes it is very sad. And to think LB is rumored to be considering "not" taking a bonus, very, very, un "GS" like and again sad. I do wonder who, when the time comes, will take their place and become the New Masters of the Universe.

Darwin said...

Upside, bought some C puts earlier, this one's sick imo. Still think CSCO sees new lows tomorrow?

About Me

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I am a former hedge fund manager, broker and capital markets dude who now trades for his own account. I love what I do. I will try to post some stocks and an occasional chart that looks attractive for entry.I will also try to point out the idiocy of conventional wisdom and the lack of value added by the mainstream financial media. These postings should not be viewed as recommendations.