-- Posted Wednesday, 24 September 2008 | Digg This Article
| Source: GoldSeek.com
Rick’s Picks
Wednesday, September 24, 2008
“Phenomenally accurate forecasts”
Just when we thought Hank Paulson had run out of tricks, he and his merry band of pranksters have orchestrated an after-hours public relations coup that has caused the S&P futures to recoup nearly two thirds of yesterday’s substantial losses in mere minutes. Here’s a graphical picture of the action, as of about 7 p.m. Eastern:
Can you guess what has occurred? Hint: The Sage of Omaha (pictured) was involved. In case you haven’t heard, Warren Buffett has taken a $5 billion stake in Goldman Sachs and will help the bank raise another $2.5 billion by selling common stock to the public. Did Paulson miss a trick by not having Buffett stride onto the floor of the NYSE and let the world know he stands ready to buy bank shares from all sellers? But that’s not exactly the self-effacing billionaire’s style – nor is throwing money away. Which perhaps explains why Buffett has chosen to buy into the bluest of blue chip firms remaining on the Big Board rather than loading up on extremely distressed mortgage paper.
Goldman Gone Wild
We were looking to buy a piece of Goldman Sachs [NYSE symbol: GS] ourselves yesterday, via a Rick’s Picks tout that recommended naked-shorting some October 100 put options if the stock fell to $100 a share. Unfortunately for us, even though sellers hit Goldman shares pretty hard early in the session, at the nadir of their $10 swoon they never traded lower than $113. But that was before Buffett rumors evidently infused themselves into the market, causing the stock to reverse sharply to an intraday high at 125.39 in the final minutes of the day. So much for muscling ahead of Buffett at the bargain bin.
We doubt that yesterday’s announcement, presumably timed to inflict maximum pain on short sellers, will have a lasting impact on stocks, however. Seen in the perspective of a mortgage debacle tallying into the trillions of dollars, Buffett’s $5 billion investment is really just a drop in the bucket. He may be the second richest American, worth tens of billions of dollars, but we doubt that every penny he could lay his hands on would suffice to rescue the real estate market in just one medium-size city such as Tampa, or Las Vegas. That’s what it’s going to take, ultimately, to turn things around. In the meantime, Wall Street bulls should enjoy this short squeeze for the few hours that it lasts.
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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2008, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Wednesday, 24 September 2008 | Digg This Article | Source: GoldSeek.com
