I'd wait for the stock to become less volatile and start showing signs of recovery before even thinking about getting long....One may miss the first 5-10% but why jump in when nothing's clear? It's like MEE - I heard in this thread it was a buy in the 42.50 area? it's now down 20% from that level What's wrong with patience?
This is a common misconception about such cases. It is not the monetary cost that is the problem, it is the regulatory/legal risk, and the reputational risk. A $1 billion settlement is nothing compared to half their clients going to competitors, or further dirt coming out and them getting a run on the bank as people flee in droves. The problem with investment banks, even more than normal banks, is they rely on day to day funding just to survive. That means one crisis of confidence can bankrupt them - it doesn't matter if they are "fundamentally sound" - perception is important enough to be their reality. And there's nothing like a regulatory lawsuit in an election year to skew perceptions - especially with the pitchforks out in force. Their trump card is Buffett, but the share price will have to fall a lot before he gets sufficient incentive to get his hands dirty in Washington.
I just got to that part in Ritholtz book, bailout nation. "When you are a bank, your existence depends on the confidence of your clients, investors and counterparties". "A company (bank) is only as solvent as the perception of its solvency" GS could end up with zero municipal or gov't work on the Fed side and guilt by association from the private side. This stock is going to be in the dumpster for a couple years. Safe but mediocre will rule. Dumb down Wall Street. Basically the Fed would like to see Wall Street run like a state agency.
I say its a buy now, looks like all the bad news is in, and its around 25% down from the highs. I actually don't see any evidence of anything criminal.
Their trump card is Buffett, but the share price will have to fall a lot before he gets sufficient incentive to get his hands dirty in Washington. ------------------ Buffetts street cred re GS went down the tubes when the Fed passed on his derivatives exemption. If WEB put more money in GS it's not going to be recognized as a vote of confidence.
Biotech is a great area, especially the diabetes realm. GIVN might be an interesting Israeli play on colonoscopies. I personally won't be buying GIVN since I don't like its financials. They have revenues of $635 on each unit and only $39 operating profit per unit. They could make $1,400 in the private market (assuming they could get $2,000 for their units). They are too beholden to the European market, but they have some great features and if approved in the US or gets traction in certain Asian economies, it could skyrocket. They have 223,000 units that they sell. I just made a major purchase on Skyworks Solutions (SWKS); the CEO seems like a very honest man and if I lose money in it, I can afford to take the hit (the absolute risk with 2.25 leverage is 3.5% of my portfolio). The six sectors I really like are: 1) Biotech - particularly diabetes, oncology divisions, and kidney troubles. Look for high-profit margin areas (flu and HMO isn't an interest of mine except for maybe a value investment play). 2) Regional Banks/Financials - these banks have not had the same run-up as larger banks. If you are going into the large bank realm, I love WFC, JPM, TROW (brokerage), CB (insurance), or NYX. I might also want to look in the pawn shop arena if you believe in a double-dip recession. 3) Tech - this is a very interesting sector that hasn't done well since the beginning of the year. 4) Telecom - these have not taken off and did well from November of 2008 to March of 2009. 5) Consumer Staples - if you think the market is getting toppy. 6) Chemicals - these are great if you are looking for something not correlated with the market. DD, MON, and PG&E are examples in this segment.
Interesting. Here's an honest question, because I can't come up with a good example myself. Can either of you name an iBank that went through something like this where they get publicly pilloried with Senate hearings and the whole nine yards, end up paying a slap-on-the-wrist fine which wouldn't even register but eventually became a third class player because of the kind of reputational hit that you describe?