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David Frankel
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I am am avid follower of the markets. Facinated by what makes them "tick". Not a huge fan of Stock brokers and investment bankers, in the words of William Travers" where are all the clients Yachts".
  • You're also right! 0 comments
    May 20, 2009 5:30 PM | about stocks: BAC, GE

     

    Just to remind, bloggers on both sides of the divide. 

    "You're also right"
     
    How can it be on the same day on this very website? I can read one article declaring we're in the process of bottoming out, and any day will turn the corner, to the next bull market. And one click later I'm reading an article about the collapse of the entire financial system and perhaps capitalism itself – Which is opinion is correct?
     
    There is a story about a man who was having a domestic dispute with his wife that was becoming more and more heated. Unable to resolve the issue they went to their Rabbi. First the husband laid out his claim, to which the Rabbi responded "you're right" The wife protested and said to the Rabbi that he hadn't heard her side of the story, when she concluded the rabbi said "you're right!" The perplexed assistant, of the Rabbi exclaimed" Rabbi, they can't both be right" to which the Rabbi said …."You're also right"
     
    Is it possible that everyone is right? While there is objective economic and financial data being reported, it is what how we interpret this data that will influence, (if you'll excuse the turn of phrase) whether the graph is half up or half down.
     
    For example BAC lost billions last year and their credit card default rate is going up, on the other hand they mad a profit in the first quarter and there are now fewer competitors in the Banking arena. So is BAC a buy or a sell. The "Bulls" will try show how the facts bode well for the future. The "Bears" will use the same facts to show why the opposite is true. Whose right, they both are.  The market is far more influenced by the fiery passions of greed and fear than the cold numbers of data. As soon as we have emotions coloring an argument, it is possible for both parties to be correct or incorrect, as the case may be. Emotions aren't concerned with right or wrong.
     
    I'm sure others have been in the following situation, they are long a stock; any story about that stock will be spun into something either positive, or if that's not possible, the author is wrong. As well the opposite, when shorting a stock all good news is misguided while all bad news is accurate.
     
     That’s actually how the market works; there is a buyer whose "greedy" and a seller whose "afraid".
     
     To try adjudicate, by saying" it depends on whether the stock price go's up or down". This will not satisfy either side, because they can always claim I was right, just allow the market more time, to demonstrate why I was right. To illustrate, imagine a discussion between two parties. One is optimistic about GE and one is pessimistic ". GE a great company whose share price will go up" How can you say that its share price went down by 70% since last year" No in the last 2 months the share price doubled!
     
    Whose right?
     
    Stocks: BAC, GE
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