You Know that Goldman Rally…Yeah, About That

Last week, I said to stay away from Goldman Sachs (GS) believing it was a value trap. The share had a brief rally but that came to a halt today.

Goldman’s Shares Plunge on Inquiries and Downgrades
Already facing investigations on two fronts into its practices in the mortgage market, Goldman Sachs came under pressure from investors as well on Friday.
After reports on Thursday evening that federal prosecutors had opened an investigation into trading at Goldman, raising the possibility of criminal charges against the Wall Street giant, the firm’s stock was downgraded on Friday by two analysts. Standard & Poor’s lowered its rating from hold to sell, and Bank of America Merrill Lynch dropped its rating from buy to neutral, citing the mounting investigations.
Investors responded by sending the stock down 9 percent in midday trading, to $145.89, contributing to an overall decline in financial shares on Wall Street.

The downgrade from BofA is noteworthy because it’s so rare. It’s funny how these investment houses are so reticent about downgrading each other.
By no means am I suggesting collusion. Heavens no, dear reader!! All I’m saying is that 1+1 equals something somewhere between 1.99 and 2.01. Any other inference you draw is entirely yours.

Posted by Eddy Elfenbein on April 30th, 2010 at 1:48 pm

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