Shorting Goldman Sachs stock for a quick 3 - 10% gain
I can't help but think that Goldman Sachs stock rising 30% since the Trump election is due partly to human bias rather than anything of actual material consequence. GS could not have just increased in value as a company by 30% just because of an election. I think everyone got the genius idea "I want to buy stock in an investment bank and defense company!" and obviously for the investment bank stock, $GS is the first one that comes to the common man's mind so it has risen disproportionately. But just like we saw happen with defense stocks, I feel that there has to be some coming back to earth for the price of Investment Bank stocks.
Anyone have any opinion on why their stock may continue to rise and or stay where it is? IMO it is currently inflated due to human bias and the price of their stock does not represent the actual value of the company.
Would you short Goldman? (Originally Posted: 09/07/2011)
With several investigations and Lloyd hiring that one lawyer guy do you think shorting GS is a good idea?
No. It's a terrible idea...the fact of the matter is that the company is worth significantly more than $107/share. Don't play the "greater fool" game. Just don't do it.
^^ Lolz. I really like his justification.
I've been short GS since $140 and more recently short the financial sector as a whole.
The recent litigation issues I don't think are as significant as some other issues though. It's not my main thesis for shorting them. Definitely a thorn in their side, nevertheless.
I'm a huge fan of using price action as an indicator and for at least the last year, price action in GS and the financials have been awful. They still haven't recovered from the crisis and are facing many of the same issues. Many people argue that the banks are cheap on a book value basis, but that assumes that their book value is accurate, which in many cases it isn't as evidenced a la 2008 crisis. They still are super vulnerable to mortgage defaults as we recently saw and a lot of their assets could be written down if properly valued, along with undervalued liabilities.
Many of the revenue sources for banks are drying up. Sure you still have a relatively easy arbitrage because borrowing money is so cheap for the banks, but they are still losing their bread and butter. Look at their trading results. Back during their perfect trading quarters they seemed superhuman, but if you look at the most recent quarter's performance they are very mortal and prone to losses like the rest of us.
The mess in Europe and greater chance of economic slowdown also dampens a lot of their other revenue sources. Not to mention, the regulation mess is still not over. Basel III and Dodd-Frank WILL negatively affect them as the time passes. Most of the Dodd-Frank impacts are grandfathered in and won't be implemented until the coming years.
Especially with the current vol, debt and equity underwriting is going to take another hit. Trading volumes are low so their commission fees are taking a hit. Long story short, the market isn't optimal for them to be earning money right now and it won't improve for a decent amount of time, IMO.
my opinion doesnt and nvr mattter As a trader I would nvr trade gs
Completely agree with lbreitst. The entire banking sector has been juicing up returns mainly through massive leverage, but the rules of the game have changed. The Fed extending the duration of its balance sheet through the form of twist, torque, or giant mortgage refi will only cut into interest margins for these banks. I would short the entire financial sector, not just GS. There's a reason their valuations are so low.
Every time one of the 'Smartest guys in the room' is trying to spin off their businesses, I'm shorting.
http://www.peterwarren.no/wp-content/uploads/ipo.gif
Bearish on financials.
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