Archive

Buy Sell Jump: Steven M. Cohen's Blog

A President Bows, a Stock Market Unbowed

No doubt it was jarring to see the President of the United States offering that stiff bow to Saudi Arabia's King Abdullah, and unfortunately, indeed inescapably, the word "obsequious" comes to mind. A White House spokesperson sought to dismiss it as the president essentially stooping down to grasp the monarch's hand while making up for their disparity in height, but the president's face seemed to descend almost to the point of the King's beltline (or, more accurately, sash line). However, when earlier in the week the president greeted Queen Elizabeth, not exactly a strapping six-footer herself, Mr. Obama managed to grasp her hand while offering only a slight nod of the head, back perfectly erect, proffering no additional accommodation to Her Majesty to compensate for their difference in height.

Continue to full text of posting...

By Steven M. Cohen  |  Fri, April 10, 2009 4:59 PM  |  Permalink

Apologia at G-20, No Car Guys, but a Rally

President Obama made an unintentionally clever pun while in Europe for the G-20 meeting, telling his fellow leaders that the U.S. had some "accounting" to do for the global financial mess. Mr. Obama might do well to concentrate on his own accounting, specifically how any of his ambitious social-engineering projects will be funded short of squeezing every last dollar out of every last taxpayer, and even then running the metaphorical currency printing presses at full tilt. His "accounting" comment, of course, referred to our nation owning up to its considerable culpability in pushing the world to the economic precipice, at least according to the president. Imagine, a U.S. president stopping just short of abjectly apologizing for the country's financial excesses, the root cause of the economic havoc around the globe, a worldwide financial virus that we inflicted on a host of countries that were merely innocent bystanders. What a contrast to that out-of-control cowboy who never apologized for anything, even though he was responsible for everything. The G-20 attendees, especially the Europeans, ate it up.

Continue to full text of posting...

By Steven M. Cohen  |  Sat, April 4, 2009 9:30 AM  |  Permalink

White House Throws Wagoner and Market Rally Under the Bus

There is no hope for print media. It's March 30 and I'm reading the April 6^th issue of Business Week that may already be irrelevant. Specifically, the article I'm looking at is entitled "This Rally May Be For Real." Problem is, it's a rather blue Monday and the market is down nearly 300 points mid-morning. Future-dated, backward-looking material out of sync with the present is enough to give you whiplash.

But I have digressed already, something that should not be done in the first paragraph, so let's get back on point. The reasons for today's market indigestion are complex and perhaps not readily apparent. The most obvious one might be Treasury Secretary Timothy Geithner's weekend observation that many banks will need a lot more financial help before they are out of the woods. This splash of ice water predictably has cooled off financial stocks, some of the best performers during the market's recent surge of about 20% from its early March lows.

Continue to full text of posting...

By Steven M. Cohen  |  Mon, March 30, 2009 2:43 PM  |  Permalink

The A.I.G. Debate - A Failed Opportunity to Exercise True Leadership

If the great AIG bonus debate is what today passes for national discourse, then we have even larger problems than a sour economy. Financial crises, with awful consequences like unemployment and loss of savings, unfortunately seem to reappear nearly every decade, but they are eventually resolved. But when the government essentially sponsors an effort to find scapegoats, when the prevailing discussion in the country is based on either misinformation or just plain ignorance, when the shrieking reaches decibel levels usually found on airport runways, then we are truly in trouble.

Continue to full text of posting...

By Steven M. Cohen  |  Fri, March 27, 2009 8:53 AM  |  Permalink

Obama and Business: You Always Hurt the One You Love

It will be interesting to see how the administration woos back the significant portion of the financial community that it has been beating on for the past few months. The very object of much of its populist vilification, the administration hopes, will enthusiastically agree to participate in Treasury Secretary Timothy Geithner's latest iteration of a plan to rid banks of the "toxic" assets that presumably are an obstacle to renewed lending. The problem is that once the "outrage" populist genie is out of the bottle, it is very difficult to get him back in. Sort of like trying to get the toothpaste back in the tube. Or unringing a bell.

But first, a market that rocketed nearly 500 points, or about 7% yesterday, deserves a midweek comment. This space does not want to develop a reputation for all gloom, all the time. A major market move is always good news—even if some pundits predictably characterize it as a "bear market rally" or a "dead cat bounce." It's best to reserve decision on the real significance of yesterday's move until more time passes.

Continue to full text of posting...

By Steven M. Cohen  |  Tue, March 24, 2009 2:43 PM  |  Permalink

Congress as the Recession's Laugh Track - Send In the Clowns!

Americans love all sorts of entertainment and welcome the distraction it provides during hard times. It has been estimated that 80 million people, or 65% of the population at the time, attended movies on a weekly basis in 1930, right after the stock market crash as the economy really began to unravel. Movies throughout the Great Depression provided a level of escapism that helped the country cope with truly hard times.

Americans during the Depression found the movies an inexpensive form of escapism. These days they are more of an extravagance. Fortunately, we don't have to spend the $12 a ticket or so to be entertained just like audiences in the Thirties; we only have to turn on our televisions. There we can find literally dozens of humorists delivering a high level of uproarious material worthy of the great comics of the Depression-era cinema, rivaling anything offered back then by, for example, The Three Stooges, with whom the present cast of comedians has much in common. Or think The Marx Brothers, but without any of Groucho's wit.

Continue to full text of posting...

By Steven M. Cohen  |  Sat, March 21, 2009 11:35 AM  |  Permalink

A Random Walk Down a Stock Market Recommended Reading List

Everybody needs a break. In an effort to keep readers from becoming more depressed during this recession/depression, let's step away from the putative subject matter of this space—the impact of (usually misguided) politics on the markets, and momentarily revisit the days when markets acted somewhat more rationally. In preparation for a return to relative normalcy, I've put together a reading list—some would probably call it nostalgic, parts of it even quaint—of books that I've found valuable when thinking about how markets work. If someone characterized it as more stream-of-consciousness than organized exercise, I would have no argument.

This eclectic collection is decidedly un-academic, meaning that a list put together by a business school professor would look very different. Some of these books I have read recently, others over the past few years, and still others a long time ago. All of them, I think, have application today, even though some of them are very conventional in their approach, and many investment professionals think that "this time it's different." I don't subscribe to that notion, and while I recognize that the present environment is particularly difficult and challenging, I still believe that certain principles--for example looking for good valuations, diversification, etc.--apply regardless of short-term economic, political and market disorder. So here are some suggestions, in no particular order:

Continue to full text of posting...

By Steven M. Cohen  |  Wed, March 18, 2009 12:46 PM  |  Permalink

Stock Market: On the Precipice or the Launching Pad?

With last week's four out of five positive days resulting in a 9% boost to stock prices, the market appears poised at some kind of crossroads, perhaps even an inflection point at which positive prospects can begin to at least compete with the steady stream of awful economic news that has pervaded the investment environment for the last eighteen months. Bullish analysts and traders maintain we have seen the bottom, while their bearish counterparts brace themselves for another painful plunge. There seem to be more of these predictions at the extremes than those in the middle simply calling for sideways movement.

Most vividly demonstrated by the banking sector is the notion that companies with strong balance sheets will weather the storm while those with suspect or faulty assets will, or have already, become historical footnotes. The same, of course, can be said for any industry in a downturn with no place to hide for those companies that have accumulated now-soured assets or too much debt. It might make sense, then, to look at the stock market in that same light by constructing an informal balance sheet of assets and liabilities that will impact the market's performance going forward. While not a crystal ball, such an exercise might provide a bit of perspective in a highly-skewed environment that has left investors enervated (as well as impoverished to various degrees). However, in compiling these competing lists of factors it becomes evident that neither side of the ledger can be used as a convincing argument to trump the other—at least not yet.

Continue to full text of posting...

By Steven M. Cohen  |  Sun, March 15, 2009 4:51 PM  |  Permalink

Market Breathes Sigh of "Relief" Over Political Fissures

Investors finally caught a break yesterday with a market rally of nearly 6%. Although perhaps only a brief respite from the grinding downward spiral, it was impressive in both its strength and suddenness.

The type of unexpected surge we saw yesterday naturally revs up the conjecture machine as commentators and investors struggle to explain an abrupt shift in direction. A variety of explanations poured forth, among them: Citi's Vikram Pandit's surprisingly encouraging description of the company's performance for the last two months; Ben Bernanke's comments suggesting a slight adjustment to mark-to-market asset valuation; and, perhaps most convincingly, the SEC's apparent intention to put limited restrictions on short sales and to reinstate the "uptick" rule.

There is another reason that I have not seen cited yet, so obvious that it could be found on the front page of yesterday's New York Times. The right-hand column was entitled "Obama's Budget Faces Challenge by Party Barons." It outlined a number of significant objections raised by important Democratic House and Senate members on key aspects of the budget, including tax deduction limitations, farm subsidies, Medicare/Medicaid/Social Security cuts, emissions caps, and several other proposals.

Continue to full text of posting...

By Steven M. Cohen  |  Wed, March 11, 2009 12:43 PM  |  Permalink

The Administration Speaks, the Market Unravels

Despite today's "relief" rally, the list of explanations for the market's daily collapse continues to grow, faithfully compiled by a legion of experts and commentators. Let's review:

1. President Bush left things in such sorry shape that the market is destined to resemble a vast investment wasteland for years.

2. The "stimulus" package just won't be "enough" to get the economy out of its tailspin (to repeat, having been left in such sorry shape courtesy of President Bush);

3. The various bailouts—AIG, Citi, autos, banks, mortgages—just can't collectively serve to arrest the accelerating economic meltdown;

4. Greedy bank officials, mendacious mortgage lenders, feckless corporate chieftains, and rapacious Wall Street honchos have wreaked permanent damage on the economy, reducing it, as Warren Buffet recently remarked, to a "shambles."

Conspicuous by its absence on the list is any connection between the market's abysmal performance and the new Administration's prescription for a cure. There is by now a nearly perfect correlation between the daily drumbeat of announcements from the White House and the market's precipitous decline. Despite this obvious close connection, it's beginning to look like there is no one within the Administration—or the Democratic congressional majority for that matter—who notices or, perhaps, cares.

Continue to full text of posting...

By Steven M. Cohen  |  Tue, March 10, 2009 5:25 PM  |  Permalink