.... Shares fell 2.6% in after-hours trading when the Journal's story broke. They tumbled 5.3% after the opening bell Friday on the New York Stock Exchange. Those investors may be starting to concede that the looming legal issues surrounding the firm may at last drive away Goldman's client base. .... http://www.marketwatch.com/story/will-embattled-goldman-sachs-lose-its-clients-2010-04-30
Are other Wall St. firms different? If we peel back the covers, I bet we will find that everybody else does the same thing. I don't trust or distrust GS any more or any less than before this came to light. It's easy to say "those Jews are trying to rip me off!" but in actuality, everybody is trying to rip you off. If I have a billion dollars, I know that everybody wants to steal a piece of it. What can I do with it? Spread it around, limit my potential losses. Five years ago, if I took my billion and put 1/10th of it into each of the Dow, bonds, Bernie Madoff, GS, JP Morgan, real estate, oil, gold, emerging markets, and cash, well that's pretty good diversification. And it still is today. With hindsight, we now know that Madoff was a bad investment, but we didn't know that at the time. If GS had advised us to get in on CDO's, they would have been coining money at the time. We keep doing what works until it doesn't. What else are we supposed to do?
If any type of felony charges are filed against GS, institutional investors would then be prohibited from dealing with GS. That would be "The End" of the firm. The stock still can fall a long way in the interim as sentiment turns against the company. :eek:
As last week's senate hearing shows lots of Goldman "prop" actually relies on selling unwanted risks to more naive clients.