/Quick Point/ – Goldman Sachs Says Sell Bonds, Buy Stocks

Tuesday, October 5, 2010

Paraphrasing the tag line in the old EF Hutton ad, “When Goldman Sachs speaks, investors listen.”

From The Wall Street Journal: “Goldman Says Peak in Treasurys Is Past” (By Min Zeng, Tuesday, October 5, page C-10):

“Goldman Sachs Group  Inc., hitherto one of the biggest Treasury-bond bulls on Wall Street, now says the rally has seen its peak and the best trade going forward is to buy stocks, not bonds.”

“Mr. Garzarelli said that the 10-year note’s yield will trade at about 2.5% for the remainder of this year and then climb to 2.75% to 3% in 2011 as riskier assets outperform.

“’Equity [stocks] offers much better return opportunity than bonds going forward,’ said Mr. Garzarelli.”

Goldman Sachs is among the first Wall Street firms to announce a shifting trend, so it’s wise to listen.

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