Tom Reese/Paul Rubillo, Dividend.com
Goldman Sachs has announced this morning that they are downgrading the Steel Sector. Some of the factors influencing this move are a strengthening dollar and fears of easing demand from China.
Goldman Sachs said Nucor Corp. and United States Steel Corp. would remain buy-rated stocks, but that it is removing U.S. Steel from its ''Conviction Buy'' list. If readers remember our post back on July 19, we recommended to readers it was time to lighten up in the steel sector. That article garnered some some angry reactions from readers, which we’re OK with. However, we feel the need to point out that sometimes Wall Street may not do a good job at getting you out near the top.
Back in the crazy Dot-Com days, we witnessed some historically bad calls that are still memorable to this day. The worst part about some of Wall Street’s calls back then was that stocks would go from 200 to 10 before an analyst recognized there was something wrong and downgraded the stock to a ''sell.'' Things are not quite as bad these days, but we still tend to focus on our own data and drown out many of the upgrades/downgrades we hear from many Wall Street analysts.
The Bottom Line
No one firm will ever be perfect, but investors need to remember the tape is the final judge. That’s why we watch the tape action so intently for indicators of sector rotation (which has negatively impacted steel stocks for almost two months).
Be sure to visit our complete recommended list of the Best Dividend Stocks as well as a detailed explanation of our ratings system here.
Tom Reese and Paul Rubillo are senior editors at Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news and analysis, including ''Best Dividend Stocks,'' as well as a detailed explanation of the Dividend.com ratings system.
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