Would You Own Stock in Goldman Sachs?

Would You Own Stock in Goldman Sachs?

Here on WSO we have spent a whole lot of ink either praising Goldman Sachs hoping to work there, or bashing it for its many well-documented publicity stunts. But I haven't seen anyone really ask the most important question here...can it make us money?

Forgetting all the headlines and all the reprehensible behavior of its executives for a second, how do we evaluate Goldman's stock (NYSE:GS)? Here are some basics:

* Closed yesterday at around $140
* 52-week range of $129-175
* PE 15.42
* EPS 9.13
* Dividend of 1%

I had an investment banking professor in school who loved to give out "life lessons." One of them was, "If you see Goldman stock under $100, BUY IT. If you don't, you'll kick yourself when it triples in value a year or two out." I'm inclined to believe the guy. My thinking is that, financial stocks being as volatile as they are, if there's one group that's going to get its stock back up again, it's Lloyd and company. It only went public in 1999, and at the height of the bull market it almost hit $250.

After hitting a low of just over $50 in mid-October 2009, so far Goldman stock has been on a pretty steady climb, although it does seem to have stalled of late:

http://finance.yahoo.com/echarts?s=GS+Interactive#...
How do we evaluate this one, monkeys? Do we buy and hold? Do we short it in light of its most recent hiccups (see Eddie's post below this one)? Is it overpriced? Do we wait for a better price? Or do we just leave it all alone, thinking there's a better deal out there in this industry?

Comments (17)

Jun 1, 2011

goldman bull here--even with Volcker (currently getting neutered/delayed in Congress), they are nimble enough not to have principal investing/lending/prop trading account for 10% of their bottom line anymore. unless some insane new scandal comes out, Goldman's valuation still looks compelling at yesterday's close for the simple reason that they STILL make an insane amount of money relative to their peers by almost every metric and with less people.

Jun 1, 2011

i like GS's EPS and their PE is pretty good, but comparing that with another financial like Citi..ill take citi, largely because its so cheap.

Jun 1, 2011

I think it might fall for a couple of months, but I'm bullish on the long term, so go short until it hits $125 or even $120, then go long until 160-165. If you want a strategy with less risk don't go short, just wait and see if they go down to those levels, then buy and if it doesn't go down just don't buy.

Jun 1, 2011
Pfalzer:

Would You Own Stock in Goldman Sachs?

Here on WSO we have spent a whole lot of ink either praising Goldman Sachs hoping to work there, or bashing it for its many well-documented publicity stunts. But I haven't seen anyone really ask the most important question here...can it make us money?

Forgetting all the headlines and all the reprehensible behavior of its executives for a second, how do we evaluate Goldman's stock (NYSE:GS)? Here are some basics:

* Closed yesterday at around $140
* 52-week range of $129-175
* PE 15.42
* EPS 9.13
* Dividend of 1%

I had an investment banking professor in school who loved to give out "life lessons." One of them was, "If you see Goldman stock under $100, BUY IT. If you don't, you'll kick yourself when it triples in value a year or two out." I'm inclined to believe the guy. My thinking is that, financial stocks being as volatile as they are, if there's one group that's going to get its stock back up again, it's Lloyd and company. It only went public in 1999, and at the height of the bull market it almost hit $250.

Prof Murphy?

Jun 1, 2011
wannabe2013:
Pfalzer:

Would You Own Stock in Goldman Sachs?

Here on WSO we have spent a whole lot of ink either praising Goldman Sachs hoping to work there, or bashing it for its many well-documented publicity stunts. But I haven't seen anyone really ask the most important question here...can it make us money?

Forgetting all the headlines and all the reprehensible behavior of its executives for a second, how do we evaluate Goldman's stock (NYSE:GS)? Here are some basics:

* Closed yesterday at around $140
* 52-week range of $129-175
* PE 15.42
* EPS 9.13
* Dividend of 1%

I had an investment banking professor in school who loved to give out "life lessons." One of them was, "If you see Goldman stock under $100, BUY IT. If you don't, you'll kick yourself when it triples in value a year or two out." I'm inclined to believe the guy. My thinking is that, financial stocks being as volatile as they are, if there's one group that's going to get its stock back up again, it's Lloyd and company. It only went public in 1999, and at the height of the bull market it almost hit $250.

Prof Murphy?

That's the guy! Murphy's the man, such a baller.

Metal. Music. Life. www.headofmetal.com

Jun 1, 2011

Someday they will be listed along with Drexel, Lehman, and LTCM

Jun 1, 2011

NO.

If you work in finance and buy stock in an investment bank, you'll kick yourself during the next market crash. It is like someone who works on an oil rig placing a leveraged bet on oil going up.

You want to buy oil companies and infrastructure to help diversify your risk. Don't touch investment banks.

    • 1
Jun 2, 2011
IlliniProgrammer:

NO.

If you work in finance and buy stock in an investment bank, you'll kick yourself during the next market crash. It is like someone who works on an oil rig placing a leveraged bet on oil going up.

You want to buy oil companies and infrastructure to help diversify your risk. Don't touch investment banks.

I agree with the general logic behind your statement. However, shouldn't working in X industry on a day to day basis give you insight into your company, competitors, etc. that is above the general market knowledge. Therefore giving you an edge that you could profit on.

Basically, what I'm wondering is wouldn't it make sense to a certain extent to invest more in an industry that your an expert in versus another industry where you dont have this advantage?

Also, for those who have worked on the same industry for several years have you been able to see up turns/down turns before the market recognized it and have the opportunity to profit on it (whitout getting charged for insider trading)?

Jun 1, 2011

Heh, you should have bought GS in 2009. I bought it around $100 and later sold for $172- I have nothing to brag about though as that was one of the few "beaten down bank" bets that I made in that period that worked out (I actually tried to take delivery of my LEH shares since I figured the actual certificate would have some nostalgic value).

GS is a good company, but I am not so sure about investing in them. I worked in FICC and wasn't even exactly sure where all the money was coming from. My personal opinion is that they were kind of in the process of jumping the shark- I saw too much aversion to new ideas based solely on the argument that "this is Goldman Sachs and so we must be doing it the best way already." As mentioned above, I stay out of financials these days to diversify risk. Especially these days where it seems half of Europe is on the verge of bankruptcy, the US, however remote the chance, is talking about defaulting, amongst the backdrop of high unemployment, a stretched US consumer, and a housing market still in the shitter... investing in any sort of bank seems to have a lot of downside risk.

Jun 1, 2011

GS is a BUY

Jun 1, 2011

I wouldn't buy GS right now, because I wouldn't buy anything right now. Holding a cash / gold barbell right now, heavy on the cash. The data has been weak, the bond market is signaling pain, and I want to see how we react to the end of QE.

I'm guessing that the govt. will wait right until just before the August deadline to get its shit together, the markets will freak out at some point, and that will be your buying opportunity. Either that or we have QE3, in which case you re-balance into equities immediately.

Jun 1, 2011

No,

It's great working in finance, but there is too much agency problems in the industry to be a shareholder. Management pays out its profit as bonuses to themselves and employees, instead of adding them to the dividend yield. Financials still have some debt issues that have the sector lag the rest of the market.

Jun 1, 2011

The answer to this question is determined by your goals. As cheesey as that sounds, that is the answer. If you are looking for short term asset value increases it would be a stock to look into after this dog and pony show in congress is over. If you are looking for dividend payments from any financial sector stock you need to question your financial knowledge. If you want to invest in a financial stock, you need to keep a close eye on it and the factors that affect it.

Follow the shit your fellow monkeys say @shitWSOsays

Life is hard, it's even harder when you're stupid - John Wayne

  • gnicholas
  •  Jun 1, 2011

I do own stock in Goldman. There is something comfortably simple in knowing that your money is in the stock of the company with the smartest financial minds in the world.

Jun 1, 2011

I got screwed on GS, was playing for a swing trade at 145 with call options, either way I would say the stock is a buy. It looks good now but will look even better at 125 which is attainable at the current pace. Id buy the stock and sell strike 100 calls exp in Dec.

Jun 1, 2011

Looks like the stock is going to take a hit today, monkeys: http://www.reuters.com/article/2011/06/02/us-goldm...

Metal. Music. Life. www.headofmetal.com

Jun 2, 2011
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