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ChrisGraley (29.74)

The real fear index!

Recs

18

October 21, 2009 – Comments (4)

Now that today's plunge is being attributed to a single sell call on WFC from a single analyst, you can see how jittery the money in the market is.

My guess is that the drop in WFC triggered a switch in someones trading program, (probably GS) , and the rest of the market reacted to the sudden volume on the sell side.

The fear is definately there my friends and you can see it wouldn't take much of a spark to light the fuse.

At least one thing that we now know is that at least that 1 program trader is nervous about financials.

4 Comments – Post Your Own

#1) On October 21, 2009 at 9:01 PM, starbucks4ever (97.89) wrote:

Or perhaps, Blankfein is now talking to Geithner about the technical feasibility of pulling the rug from under WFC...

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#2) On October 21, 2009 at 9:16 PM, brickcityman (< 20) wrote:

@ Zlog... isn't that like Batman trying to "do in" Robin?

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#3) On October 22, 2009 at 1:01 AM, DarthMaul09 (29.79) wrote:

It would be interesting to see if stock prices rise back up tomorrow or if it continues to slide down.  I would guess that mutual fund managers would use these little sell offs to beautify their portfolio before the end of the year, by picking up some stocks that already had a run up since March.

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#4) On October 22, 2009 at 9:06 PM, portefeuille (99.66) wrote:

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Oct. 22, 2009, 3:37 p.m. EDT

Bove's influence rises at confluence of media, finance

By Jessica Papini

NEW YORK (MarketWatch) -- Richard X. Bove, the longtime banking-industry pundit, wields significant influence on Wall Street these days.

The 68-year-old analyst rarely talks to the chief executives of the banks he covers, isn't employed by a big global research house and prefers to work out of his suburban Florida home. Yet Bove's surprising recommendation to sell Wells Fargo & Co. /quotes/comstock/13*!wfc/quotes/nls/wfc (WFC 30.33, +0.16, +0.53%) stock Wednesday was still enough to trigger a major decline in the entire stock market.

Bove, outgunned by more well-heeled competitors, sent Wells Fargo shares and broader market indexes lower Wednesday by taking to the airwaves. He knows how to leverage the media to get a point across, which underscores how the Wall Street research-distribution model is under threat.

While bulge-bracket firms leverage large, global institutional sales forces to distribute their analysts' research, analysts at smaller firms are left to their own devices to get their research noticed.

The Rochdale Securities analyst told Dow Jones Newswires he was "surprised" by the market reaction Wednesday, adding that it was not just his comments but "there were other forces at play" in the market downturn.

Major securities firms like Goldman Sachs Group Inc., Bank of America Merrill Lynch and J.P. Morgan Chase & Co. frown upon their analysts talking to the media. Their research reports are for major institutional clients like hedge funds and mutual funds. This has increased the influence of analysts at smaller firms that are looking to step into the limelight at a time when many investors are looking for any advice in a volatile market.

"There's a small, select group of people who come to the media again and again," said Philipp Schnabl, assistant professor of finance at New York University's Stern School of Business. "Maybe they made a few right calls in the past, so people put more weight on their analysis."

Indeed, Bove isn't alone. Meredith Whitney, a former star analyst at Oppenheimer & Co. who now has her own firm, enjoys the same rock-star status with the media. Both cover financial-service stocks, one of the market's most volatile sectors.

During the Internet bubble, an earlier crop of analysts that included Henry Blodget and Mary Meeker enjoyed similar status.

...

He recognizes that his calls "are not always right" and 2008 was a "disaster year for me." After thinking the financial crisis was over when Bear Stearns collapsed and incorrectly gauging the psychology of the market, "I recommended stocks much too early, and in this business if you're too early, you're just wrong," he said. Also, last year Bove recommended buying shares of Lehman Brothers in the days leading up to the firm's bankruptcy.

In 2009, Bove appears back on track. He told investors to buy Citigroup (C)and Bank of America when their stocks dropped to under a $1 and under $3, respectively. Both stocks have rebounded significantly off their lows.

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