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Goldman Sachs: A story for "Opportunists", "Vindictives" and "Realists"...

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April 16, 2010 – Comments (8) | RELATED TICKERS: GS

Goldman Sachs VS the SEC.

Crammer use to work for Goldman Sachs.

Blogs are lite up and the market tanks.

Personally, besides overhyped and overcooked, and a little redundant, (like many of you thought when you saw the title of this blog),  the exercise today was a good test of the market.  The concern of whether the market was getting top heavy got a decent response today. It seems that many people  who still disagree with the market uptick,  (foreclosures, unemployment, consumer confidence, dollar printing press...etc) are becoming resigned to it.

All in all, I really don't think "The Sky is Falling" today, even for Goldman Sachs.  The market drop was rather orderly and many were looking for an excuse to sell or a better entry point to add.

 Goldman Sachs helped to create "collateralized debt obligation" for a hedge fund. They claim to have lost $75 Million doing so. They claimed purchases were either educated or had material to educate themselves. The SEC files charges because they need to hang someone. "Others" may be guilty. The market plunges. Goldman Sachs drops $23 per share. $23 per share is worth about $10 Billion in market cap in a few minutes. Estimates are that "if guilty" Goldman Sachs will have a liability of between $700 Million and $1 billion, (the amount lost by investors who didn't do their homework).

I have no idea how to value a bank or investment firm before or after the recession. Goldman Sachs is one of the most rated equities here on CAPS. Many have already expended their "ammo" with an up or down thumb, so today's calls are not really a very good sample size. However, of the 66 Caps players who made a call after the news hit the markets, 43 gave upthumbs and 25 gave downthumbs.

   Slightly more interesting, the thumbs seemed to be entered in a similar "system" as my thoughts went during the day.

     In the first 20, Upthumbs, outnumbered down by 2 to 1.  Telling me that CAPS "FOOL" opportunists reacted for a chance to get a swing trade going.

  The next 20 were mostly downthumbs.  Implying that those with a personal thought to how Goldman and the market deserved to get their dues reacted.  23% down was clearly not enough punishment. Surely Goldman deserved more, much more.  Downthumb!

  The last group of 20 was again 75% upthumbs.   Time to reflect, evaluate, and make a call what all this means. 

I certainly don't want to catagorize anyone who played Goldman Sachs today and became part of my informal polling. I'm certain there were those with a mix of these three traits, as I am, but I'm equally certain that the calls fell somewhere in these groups. 

 From my "limited" experience in following equities that have had a major catalyst, the pain lasts 2-3 days. In this case the weekend is here, Goldman Sachs is an expert at damage control for others, and no doubt will be for themselves. Crammer, for what's it's worth, is fully on their side.

Damage could include penalties, which to me seem already baked in. It can mean a loss of business, but I really don't think so. Goldman is well respected and this economy requires their services more than ever. Their discretions, if guilty, are far removed from those that occurred to an Enron or a SAY. I give them a strong possibility of getting out of this, SEC manhunt or not, with much less damage than they received today.

Number me a Realist, maybe a misguided one, toss in some opportunists, a risk taker, and someone easily bored if my account doesn't move one direction or another.....

Discloure. Buyer in RL at $160.

 

 TSIF,  The Sky is not falling today....Goldman or not....

8 Comments – Post Your Own

#1) On April 16, 2010 at 10:27 PM, Option1307 (29.89) wrote:

I bet GS gets thorugh all of this within a week or so, today was likely a good opportunity to go long GS if that's your thing. However, I couldn't/won't ever simply out of principle. Besides, if you are into investing (cough, gambling) with banks/financial institutions, there are a lot of other options that provide a great deal more upside potential.

While GS may own the government or whatever, they "only" rallied ~110% since the market lows, just about everything else bank related gained at least 200%. So it's basically a loose loose IMO. But your probably right, a nice swing trade on the over-reaction.

Best of luck!

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#2) On April 16, 2010 at 10:27 PM, Momentum21 (81.79) wrote:

I was about to post on this but yours kind of sums mine up. Everyone has been looking for the smoking gun to indict GS but I really doubt this is it...I am certainly not here to defend CDOs or CMBS or RMBS for that matter...there is a space in time where they make sense and then they don't of course.

the time for regulation that mattered on this has come and gone.

GS makes the ultimate scapegoat, and might be guilty of something throughout this crisis, but I don't get how this conflict of interest is different from the countless others that exist throughout our system.

I am not a buyer of GS yet but do like JPM or MS as a short term trade as a way to play the news. The bears are jubilant on this news but it is going to take a lot more to bring these guys down...I always count on the news getting a little worse before better though...so I would not be able to help myself it we got down to $150 or so in the next week. 

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#3) On April 16, 2010 at 10:44 PM, TSIF (99.96) wrote:

Momentum, I thought we had enough blogs for one day on GS as well, but while I was working on my pitch for my GS upthumb, I figured I'd turn it into a blog anyway.  A few perspectives offered up for people who want them sounds reasonable to me.  I was considering giving JPM a closer look the last few days, but was too busy and then this hit.  I think it was worth some short term ammo. I wouldnt' be surprised at $150 either, if it hadn't been the weekend, I think I would have held, but this one sounds like a fast burn and back to reality.  I can handle $150, but will probably put some stops in around that area in case I'm wrong. I normally don't care much for stops, but they have some uses in cases like this.  Thanks for the feedback!

Okay Option1307...I'll put you in the vindictive catagory!!!   One might argue that if GS only rallied 110% vs. 200%, that it has more upside potential left!!! :)  I give this one a week as well for this to turn around for a decent return or a classified mistake!   I see GS, JPM, MS as possibley having good upside.  I pegged  GS as a chance to get to $200 or so this year so I might hold some long if this clears up, but right now I consider it a swing and will probably refocus on one of the others.  Thanks!

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#4) On April 16, 2010 at 11:33 PM, Momentum21 (81.79) wrote:

I pulled $150 out of the air (based on the countless times I have bought on bad news)...if you like it at $160, just buy more at $150... : ) With my luck we never see $160 again!

I just think we are more likely to see JPM or MS "rally" as this news makes the rounds...kind of like Toyota, Honda, etc. 

So I like your idea of playing a "short-term pop" because even if it misses it will come around. 

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#5) On April 17, 2010 at 9:59 AM, TSIF (99.96) wrote:

I agree, playing the drop on a Goldman Sachs should have some insurance against misjudging the market and not getting the expected "pop".  I could be proven wrong as well, hence I may hedge some downside, and often Mr. Market shows me the flaws in my play, but I can't find any scenerios where I don't see GS coming around eventually.  You just need some patience, which is something I sometimes struggle with, but am getting better with with each round of new market volitility. 

I'm use to seeing my bad news calls float further down as well. I do better lately with the attitude that I'd rather miss the boat and wait for the next one than have to bail it while crossing the river, but I think the weekend gives this one a short term duration. At any rate, having a RL interest will help me bear the pundits taking over the airwaves and blogs!

  The core business, in this case, appears very sound to me. The damage is possible, could happen over a long period of time, but I believe limited in scope, so yes, I see this as a short term Pop OR a long term hold. 

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#6) On April 19, 2010 at 11:43 PM, Momentum21 (81.79) wrote:

It got to $155 and closed at $163...I think you are in the drivers seat for a potential pop. Even though everyone expects a good number I don't think they sell off...pop seems very likely. I won't tip my cap yet and jinx it but I like your play. : )

Something pushed me to pick up some SLW today. The Sinch's guy's blogs are ringing in my ear.  

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#7) On April 20, 2010 at 1:23 AM, TSIF (99.96) wrote:

Thanks Momentum21, After hours looked good.

There has been some sell on the news on earnings for some companies this week, but I'm hopeful.

I got a little cocky on another blog that I expected
$167.00 by 8:30 am - premarket.....

 http://caps.fool.com/Blogs/ViewPost.aspx?bpid=378560&t=01001809626043225235

 I hope I didn't jinx myself being a big mouth.... !! :)

 I owned SLW from $3.50 to about $9.00. It was a good ride, and typical of my plays, I didn't hold long enough!!  I like them as a silver company.  I also played CEF, but it didn't seem to have much momentum. It didn't beat the S&P while I had it open on CAPS when the S&P was on a tear.  I had CDE pre-reverse split. It didn't seem like many shares after the reverse split!  I still play some junior minors, pretty successfully.

Sinch's blogs are good reminders about hedging with precious metals. There is a big differerence in potential performance between those that actually hold the base metals, (CEF), productive miners such as SLW/CDE and Junior miners trying to get it from the ground, such as PLM.

I think I like CDE a little better than SLW from a growth perspective.

None are as risky as "GOLD"man, but those guys sure know how to scalp a buck from anyone and everyone!  Hope that rining subsides....  :)

 - TSIF

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#8) On April 28, 2010 at 8:58 AM, sentinelbrit (86.26) wrote:

I agree. I think there are more attractive investments out there. GS may have a quick bounce back to 160-170 but that is not much. It's tough to see GS losing big time. Their shares are so cheap. However, I think this has done their reputation a great deal of harm. There are other investment banks out there who can do just as good a job as GS. If anything else, my take away from all this is that GS is more interested in making money for itself than its clients. As has been reported elsewhere, proprietary trading and trading as principal (I don't understand the difference) is where they generate most of their profits. To me, there is a big conflict of interest in doing this - and I think this has come out in the testimonies.

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