GS, Buy or Stay Away?

Peeled off my GS for scratch today, at 159.55 not the price action i was looking for i think i can get it cheaper.

 

i think i have decided to stay away and go look for a different stock, different set up. Just too much unknown here...

 

GS earnings before the bell 4/20...

Unless you're daytrading, or you're going to pick a direction and hedge it with an option, there is "screw potential" when the numbers come out with a gap up or down.

 

Within 2-3 days Goldman shares will be near 185 again and this will have blown over. Rumors will be out there that Goldman themselves prompted the SEC to release the news on Friday so they could issue employee stock options on Monday at a lower strike price.

 

A civil case (which could eventually involve the Justice Dept.) is not a buy signal.

 

I dunno. I think the charges likely won't hold water, but when main stream public opinion starts going against them, it's the reputational risk that is more of a concern.

Remember, GS did the exact same thing with Bear Stearns when it felt weakness, which is attack. You don't think that other firms on Wall Street will use this to extract a pound of flesh from them? It took 5 days for Bear to go under due to liquidity problems.

GS isn't in the same category financially, however, if clients start walking away from them, it won't take long for them to get hurt.

It's kind of a gamble, but I'm likely going to buy out-of-the-money puts and see where this things goes.

 

And you can bet they are just waiting to pounce. Fall '08 this thing was headed to 50 or below, until the change in bank status.

 

LOL.

 

By public opinion, I mean from their clients.

If all their clients use this as an opportunity to extract a better fee, or maybe they migrate to MS or some boutique IB, then it could definitely be a problem.

Clients may not want the headache of having to defend their relationship with GS. Plus, they simply may not trust GS anymore.

Also, look at how all the other governments around the world are starting to jump on this dogpile. They are all smelling blood in the water, and if they all band together and "investigate" GS, the longer they are under the cloud of suspicion of fraud, the worse off they are.

 

The clients that matter to GS don't have many alternatives. MS is viable, but is more concerned with underwriting that OTC dealing. JPM had no prime brokerage before buying BSCs, and seem to have little interest in the space.

This is more a hit to reputation than bottom-line.