|Written by Rob Goldman
I am one of 33% of people that suffer from motion sickness. I am also probably one of 100% of investors that felt the market’s roller coaster last week. How remarkable was it? At the low point of the week, the Dow was down 8% from the August 5th close. Yet, it declined by only 1.6% for the week! That is a drop of less than 200 points.
Last week I mentioned that if I was still managing money, I would not buy the dips until after we see some bounces and support. Doing so beforehand is akin to stepping into a falling knife.
Although there was clearly support and there were bounces by week’s end, fear remains pervasive making it tough to invest with a great deal of conviction. Typically, the end of August is a period of lower volumes and varying trading ranges. This is followed by a usual September – October where the market is historically at its most vulnerable and with frequent weak performances.
It will be interesting to see how it all shakes out, given the August rollercoaster. I suspect investors remain unsettled and policy and politics will continue to have a big impact on stock market direction.
On the plus side, there has been a nice increase in insider purchases recently. And, at some point investors will capitulate and be forced to implement a larger concentration in equities given few, solid alternative options and opportunities.
Of course the fear factor last week prompted huge outflows from stock funds last week with levels not reached in nearly 3 years.
For now, we believe that we are in a classic trader’s market, although some opportunities in the large cap arena, particularly high dividend yielding stocks, exist. Trading opportunities in specific sectors and market cap sizes could represent leaders in
market outperformance over the next 2-3 months. This leads right into the November deficit reduction negotiations and what is likely to be more favorable economic news.
At this time, near term moves are likely to be somewhat erratic, with policy and economic news expected to be choppy. Nonetheless, we forecast that we will see index increases from current levels by year-end, with the most nimble traders generating the best returns in various asset classes.
Going forward, we will investigate some potential bargains in these various asset classes, given the current environment, and provide some new ideas.
Analyst: Robert Goldman
Rob Goldman has over 20 years of investment and company research experience as a senior research analyst and as a portfolio and mutual fund manager. During his tenure as a sell-side analyst, Rob was a senior member of Piper Jaffray's Technology and Communications teams. Prior to joining Piper, Rob led Josephthal & Co.'s Washington-based Emerging Growth Research Group. In addition to his sell-side experience Rob served as Chief Investment Officer of a boutique investment management firm and Blue and White Investment Management, where he managed Small Cap Growth portfolios and The Blue and White Fund.
I, Robert Goldman, hereby certify that the view expressed in this newsletter report accurately reflect my personal views about the subject securities and issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the recommendations or views expressed in this research report.
This newsletter was prepared for informational purposes only. Goldman Small Cap Research, (a division of Two Triangle Consulting Group, LLC) produces research via two formats: Goldman Select Research and Goldman Opportunity Research. The Select product reflects the Firm’s internally generated stock ideas while the Opportunity product reflects sponsored research reports. SunSi Energies, Inc. paid GSCR $8,000 for a three-month research services subscription and a third party paid GSCR $9,000 for a three-month research subscription.
It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.
The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.
This report or newsletter does not take into account the investment objectives, financial situation, or particular needs of any particular person. This report or newsletter does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with the U.S. Securities and Exchange Commission or with any state securities regulatory authority.
ALL INFORMATION IN THIS REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THIS INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.For more information, visit our Disclaimer