Weekly Market Update for November 10, 2023, from DeWayne Hall: What Big Investment Banks Keep Getting Wrong

We like to read what the big investment banks and financial services companies have to say, and three are at the top of our list. Morgan Stanley, Bank of America, and Cantor Fitzgerald’s weekly and bi-weekly reports are very insightful and packed with research and commentary from the top analysts groomed at the finest institutions.

The reports are never short on prognostications on all things financial, from the economy to the stock market. The narratives are compelling, backed by data and pages of footnotes. The presentations are smartly written, with enough charts and graphs to make your head spin. They’re described as chic professionals with an air of confidence that can only come from the Wall Street big boys. And what these guys put out is analyzed by investors and traders about as much as a Jerome Powell news conference, like they decipher codes leading to the lost treasure. 

These are the best reports money can buy, provided by the top financial minds in the world. And if you had been following their sage advice the past year, your portfolio would be down, big time.

What big investment banks are getting wrong

Morgan Stanley, Bank of America, Cantor Fitzgerald, and other Wall Street titans have been completely wrong this entire year. They have been calling for a meltdown for over a year and have continually encouraged investors to flee or short stocks. We keep track of their market predictions on one of the whiteboards in our office, and we have the receipts.

Now, don’t get us wrong. We love what these guys write and honestly agree with almost everything they’ve put out. Their reasoning for expecting a potential recession/depression from the effects of a combo of Bidenomics along with rising interest rates, inflation, and unemployment cannot be argued. So we see merit to their case for the stock market tanking back into Covid-era ranges. What they’ve been beating the drum about for the past year has a high probability of taking place. It’s their timing we’ve questioned.

In our experience, Wall Street is good at letting everyone know what will happen but bad at knowing when. Their fundamental narratives are usually correct, but their timing is horrific. Either they need a quick lesson on technical analysis and how to incorporate it into their fundamental analysis, or they need to get out of the prediction business because following them can hurt a portfolio. 

So, do we agree that the stock market is going to drop? 

Yes. 

Just not yet.

Good Life Asset Strategies continues to watch market trends

Morgan Stanley, Bank of America, Cantor Fitzgerald, and the rest will eventually be correct in their bearish conviction. The question is how much money they lose their clients until they are finally right.

Based on our technical analysis of the charts, stocks continue to blow off a deteriorating economic and geopolitical landscape. The market has been resilient right in the face of everything. The trend is your friend, and for now, the trend says higher. 

That will change one day soon. Bad news will suddenly be bad, good news will be bad, volatility will rise, and the bear will rear its ugly head again. The big question is when, and no one holds the golden key that unlocks that answer, including all the Ivy League alumni busy putting out their beautiful reports. The technicals will provide clues of a trend change, and there will be some signals that rise to the surface to provide an edge to the discerning eye. 

But, as in times past, the bear will return when everyone least expects it – most likely when the big investment banks start publishing bullish reports.

The views expressed represent the opinion of Good Life Asset Strategies, LLC. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and nonproprietary sources that have not been independently verified for accuracy or completeness.