Monday, November 3, 2008
Thoughts on Goldman.
I have heard many talk about 'best of breed' stocks to which you must hitch your wagon. In the financial sector few would argue Goldman is not exactly that and who would even attempt to with a littany of former partners in congressional, senate, gubernatorial, and central banking seats of influence across the globe. Throw Mr. Buffett's buying in to the mix and you have a jaggernaut of finance, the pinnacle of 'best of breed', not to mention connected up the wazoo.
If memory still serves me Mr. Buffett is in his GS position at $124 which leaves him down 25% to this point. A not inconsiderable sum for even a man of Mr. Buffett's means. Small consolation to the lemmings who followed the man with the midas touch into Goldman paying close to $140 the day the news broke.
The chart of GS (above) shows a series of lower highs being made and Buffett followers had better hope the lows of Oct 6, be they closing or intraday hold. What is disturbing of GS further still, is the action of the tape recently. On Thursday, last week Goldman sank as the market rose close to 200 pts, with Goldman closing near its lows of the day with the lowest closing low since that Oct 6 debacle. Friday was not much better as the Dow rose 140pts and GS was up a buck and change. Funny how the Goldman shills who are all to happy to cheer on days when Goldman is up and the market is down yet they disapprear when any type of negatively divergent tape action rears it head.
The question I would pose to the Goldman bulls is, what can of earnings can Goldman earn when 50-1 leverage is removed from the mix and further, what kind of multiple will those earnings command?
Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".
Short 1 unit Apple ticker AAPL at $110.90 stop at $113.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop at $34.31