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TMFEditorsDesk (< 20)

Thank You Goldman Sachs

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24

August 24, 2009 – Comments (3) | RELATED TICKERS: GS , MS

The WSJ just broke a report that basically says something I bet we all instinctively knew anyways, but nevertheless it is still making ripples. Essentially, Goldman Sachs' (NYSE:GS) research analysts are conducting "trading huddles" where they give "short-term" stock tips to other analysts who then call their 50 best clients with the advice. So what's wrong with that? Well, the stock tip is often contrary to what the analysts are writing in their research reports -- research reports that all the clients, not just the best ones, are privy to.

Some of the not so favored clients (aka, anyone that is not a hedge fund or an institutional investor) are upset that they are not getting the same service and information that others are getting. In addition, securities laws prohibit firms like Goldman from giving advice that contradicts their true beliefs and mandates fair dealing with all customers.  Morgan Stanley (NYSE:MS) does something similar -- however, they call the tips "research tactical ideas" (so creative!) and find loopholes by providing disclosures telling customers that they might contradict another opinion on the stock. 

Is anyone here surprised? Goldman is treating its best customers, well, better than other customers? What a shocker.

If I were a Goldman customer, I'd feel fortunate right now. That is -- if I'm a true investor. Because investors, as opposed to speculators, don't try and time the market, especially when it comes to short-term price fluctuations that revolve around earning reports and such.  Often times, the tips are only targeted for a few days, or a week. Analysts are encouraged to use cautious language like "oversold" or "run up", as opposed to "buy" or "sell". I certainly wouldn't want that type of shifty, ambigously random information. All those "stock tips" would only be a distraction to my overall investing strategy. 

As essayist and ex-trader Nassim Taleb would say -- the early morning Goldman huddles only serve to clutter your financial conscious with "noise" as opposed to useful "information". 

So for all the small fish Goldman clients, you can thank your bank ahead of time for not bothering you with their week-to-week snippets of arbitrary "buys" and "sells" masked under the guise of "ups" and "downs".

 

-Jordan (TMFPhillyDot)

3 Comments – Post Your Own

#1) On August 25, 2009 at 5:17 PM, AdirondackFund (< 20) wrote:

@ Jordan

Imitation is the sincerest form of flattery?  Is that your claim?  You're a dollar high and a day late on this story.  Censorship AND plagerism?  Not bad.  It's a 'buy one, get one free' day for you!

 http://caps.fool.com/Blogs/ViewPost.aspx?bpid=248175&t=01006181459549445759

TMFEditor'sDesk missed the Anti-Semitism charge that Blankfein levied against THE WORLD, while his and Feinstein's wife were 'bulldozing' the competition at last week's Charity Event in The Hamptons.  Blankfein's venom was especially directed at 'media critics'.  The man has become unglued and is blaming others for his own culpability in committing crimes against the Country.  Hiding behind Anti-Semism is Fascist....not sexy.  Plagerism is Fascist as well.  It is the philosophy that says 'It is what I 'say' it is, not what it is.'  

     

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#2) On August 25, 2009 at 5:44 PM, TMFEditorsDesk (< 20) wrote:

@AdirondackFund

It looks as though both of our blogs were posted on August 24th, so unfortunately, your accusation about plagerism doesn't hold much water. However, it does show that we have similar opinions on the story and both found it worthy enough to write about. Also, the Editors Desk, or anyone at TMF for that matter, in no way shows favoritism towards GS.  We appreciate your posts and comments.

-Jordan (who owns no shares of GS)

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#3) On August 25, 2009 at 5:54 PM, AdirondackFund (< 20) wrote:

Actually, they are time stamped, and as you know, it does take some time for TMF to 'decide' if it is going to censor a blog, so no, you are wrong.  Mine was written well in advance of yours.  You also missed the main point in your Censorship Decision, you claimed I was being was being Anti-Semitic (for God knows what reason) when if you read Charlie Gasparino's article at www.thedailybeast.com, it is abundantly clear that it is Blankfein himself who charges THE WORLD with being Anti-Semitic in it's critcism of Goldman Sachs.

You do read here at themotleyfool don't you?  Look it up.  It's 'time stamped'.   

 

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