Market guru Laszlo Birinyi says the $50 billion Bernie Madoff ponzi scheme may make for good water-cooler chat but has little impact beyond the scam’s unfortunate victims.
“This will have a very short duration,” he told Bloomberg TV.
“What everyone is really worried about is economic growth. This becomes a gossip issue, and I’m not sure it really affects the market.”
If the scandal involved the fate of a major financial institution, the consequences would be greater, he says.
“But other than being a Wall Street version of People magazine, I don’t think it will have much impact.”
Birinyi believes the stock market has bottomed, noting its resiliency in the face of bad news such as a record November job loss and weak earnings from Goldman Sachs.
“I think the market has bottomed, but I caution against thinking it’s going substantially higher next year,” he says.
Investors should focus on tactics rather than strategy, Birinyi maintains. “Taking profits in small bites is the way to go,” he says.
“I don’t think this is a market where you can buy things, put them on the shelf and walk away. Buy, have a price target, and when you reach it, exit and start all over again.”
Others agree that the market has no quick fixes.
“People would like a silver bullet, but at this point there are no silver bullets,” David Katz, chief investment officer of Matrix Asset Advisor, told The New York Times.
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