Monday, February 28, 2005

Turning point indicator?

Back in the 90's, Merrill Lynch fired a more conservative Internet analyst and hired Henry Blodget over a $400 call on Amazon and the attention it got, then watched the Internet bubble implode. [and Blodget cost them a ton in fines..]

In the late 90's, George Soros hedge funds threw in the towel and started buying the tech stocks they had been avoiding, only to watch them plunge not too long thereafter.

Julian Robertson, on the other hand, stayed with the value bent in his funds, faced criticism, lost assets and ultimately closed up shop, right as the tech bubble imploded and his value stocks turned the corner.

Merrill Lynch recently cut back their commodity trading just as the commodity market hit bottom. Commodities markets haven't looked back since.

So these kinds of moments when heads roll, long held tactics change, entire departments are fired can sometimes signal something much larger.

Thus, could the below be a sign that the real estate bubble is finally cresting?

A Prominent Wall Street Bear Calls It Quits excerpt from WSJ.

"One of Wall Street's most high-profile bears during the stock market's bull run in the 1990s -- and more recently a big bear during the real-estate boom -- is going into hibernation, this time for good.

David Shulman, the former chief equity strategist at Salomon Brothers, will retire from his position as senior REIT analyst at Lehman Brothers Holdings Inc. on March 11.

Mr. Shulman had been bearish on the stocks of REITs, or real-estate investment trusts, for the past couple of years -- and wrong, as the stocks delivered annual returns of more than 30% in each of those years and trounced the broader market. And Mr. Shulman isn't shuffling off into the sunset quietly: He still thinks REIT stocks are too expensive."

"Mr. Shulman joined Lehman Brothers to cover REITs in 2000. His resignation comes less than a month after he published his most bearish note on the sector, an outlook for 2005 titled "More Than a Real Estate Mania." In it, he likened selecting REIT stocks for a top-picks list to "rearranging the deck chairs on the Titanic" and predicted the widely tracked Morgan Stanley REIT index would fall 18% this year."


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