Not all Equity Strategists are Created Equal

There are many decent technical analysts on Wall Street (Jeff DeGraaf take a bow) and seers like steel analyst Michelle Applebaum have thriving research businesses. But many of the equity strategists at the larger brokers are struggling to make sense of this market, which unfortunately is nothing new.

And they keep flip flopping:

Citigroup Inc.'s Tobias Levkovich cut his Standard & Poor's 500 Index forecast by 19 percent to 1,200, turning him from the most bullish U.S. equity strategist tracked by Bloomberg to the most bearish.

The new projection represents a 20 percent gain from today's close of 996.23 through the end of the year. Levkovich, 47, said the credit crisis and a slowing global economy made his previous forecast of 1,475 unreachable. The S&P 500 has plunged 36 percent since its October 2007 record under the weight of almost $600 billion in subprime-related losses at banks and an increase in borrowing costs. Bloomberg

The market is keeping him up at night, and he is turning to junk food during the daylight hours, carbo loading before Vikram Pandit hands him the inevitable pink slip:

Levkovich said a month ago that he was sticking with his year-end estimate even though he was getting ``enormous pushback’’ from clients. He said he was eating more doughnuts to cope with the pressure.

Of course, Levkovich is not the only one struggling. Hedge funds are getting killed-even old timers like Lee Cooperman at Omega Advisors are down 25% YTD.

I don’t know what the solution is, but have long maintained that the investment community needs to break out from their group think and committee meetings and spend more time reading blogs and talking to people outside of their normal circle.

An ex-employee of Omega has called this tape perfectly as as independent strategist. Unfortunately for Lee, he has not taken Frank’s advice. And with Ricky down nearly as much as his ex-partners old man, maybe Eminence should ring Frank as well.

There are people are there who saw all of this unfolding. But they are the best kept secrets on the Street.

What happens in the longer run? Maybe there is an exit, maybe not. In any case, with a 2% plus 20% compensation arrangement, when the “piper must be paid” the manager may have already been paid and the investor may have to suffer the outcome Frank Veneroso, July 2007

Or course, Frank was early in making his call, and Lee Cooperman might be as well. Brutal game we play, isn’t it?
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Levkovich Shifts From Most Bullish to Most Bearish
Bloomberg

July 2007
Perils of the New Financial Architecture
Veneroso Associates
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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Position

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