Wednesday, December 19, 2007

Market Moving as Expected

More issues in the financials, and today its Morgan Stanley. About what we expected. Took on too much risk, more write-downs etc. But isn't this what we wanted them to do? Aren't they supposed to be one of the few companies with a global reach and can get into markets no one else can? Obviously they could have chosen to go about things differently, but wasn't Goldman taking a big risk by shorting mortgage-backed securities? Goldman just happened to be right. These businesses have to take sizable risks, and unfortunately this time around, almost everyone got pinched. But they'll live to fight another day. Morgan Stanley is one of the best in terms of global reach within investment banking. If you're looking to buy a broker long term, I'd be in Morgan or Goldman.

With the bad news out, the markets breathe a sigh of relief, even if the news was bad. It is the fear of the unknown that drives markets lower, not the fear of the already known.

There will be more market turbulence because of how many people are convinced we're heading for a recession. This talk is helpful if you're a bull. But you have to be selective about what you're buying. So I'm saying buy specific sectors rather than an index.

I'm working on some ideas for where to invest in 2008, and those will be posted in the next week or two.

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