"Bearish Whitney" not infallible

Bank analyst Meredith Whitney made headlines yesterday when she downgraded Goldman Sachs (GS:NYSE) to a “neutral” from a “buy”. With Goldman up over $130 from its US$40s low of earlier this year, Ms. Whitney may well by right that the time has come to take some money off the table. JP Morgan and Bank of America shares have also recovered somewhat from the meltdown, which could well be all the gas they have left until the market has some clarity on 2010 / 11 earnings.

But let’s not make too much of the fact Ms. Whitney “called it right” on Citibank last year. She did, but the fact pattern surounding that call is entirely different than the one today. As for being perfect, no analyst would pretend to wear that label.

Ms. Whitney thought Lehman Bros. would survive when we appeared on BNN Television last year (see prior post “BNN interview on challenges at Lehman Brothers” March 17-08), and she even owned Lehman shares personally at the time of JP Morgan’s takeover of an insolvent Bear Stearns.

That’s not to say that she’s wrong this time, but can you name even a handful of “rock star” analysts from the 1990s who are still plying their trade today? The market is cruel, even for the analysts.

MRM
(I own GS and GS sub debt)