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Two Ways To Play: Goldman Gets It Wrong


Strenghten your portfolio in good times and bad.


Strategists at Goldman Sachs have reversed course on purchasing stocks with a heavy dependence on overseas sales. Instead, they're recommending companies that generate most of their revenue in the US. This according to Bloomberg.

Led by analyst David Kostin, the team recommended 50 companies -- including Union Pacific (UNP) and Kohl's (KSS) -- on the basis that foreign markets would deteriorate quickest. Those companies with heavy exposure to Western Europe are most at risk.

This is the inverse of what Kostin's team suggested in April: Buy stocks with high dependence on foreign sales and short companies that rely on U.S. demand. They stopped giving advice in July after the trade lost 1.3%, but did say at the time that the strategy "should perform over the long term."

From the Bull Pen: If following the domestic sales strategy, why not consider a play Professor Jeff Macke mentioned on today's Buzz: Burlington Northern (BNI). A solid play with 100% of sales in North America. Consider a sell stop near $75.

From the Bear Cave: Bears can consider Baidu (BIDU) for a downside play. This Chinese Googler is following a clear downtrend and may be on its way to making new lows. Bears can set a buy stops near $220.

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No positions in stocks mentioned.

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