Graham and Doddsville -- Value Investing In The New Era Message Board

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Strategies & Market Trends : Graham and Doddsville -- Value Investing In The New Era

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To: porcupine --''''> who wrote (397)	6/16/1998 8:19:00 PM
From: Freedom Fighter	Read Replies (1) of 1722

>Someday, Goldman's going public may be looked back upon as the Mother >of all Bear Market signals. >But, just to be the devil's advocate, suppose Goldman feels it needs >more money to compete with giant financial multinationals. If so, it >would only be good business judgment to raise money when Mr. Market >is accommodating, rather than waiting until he isn't. >This wouldn't necessarily require that Goldman believe that the >Market is at a top. Instead, they may believe that the Market will >continue to rise, and that they better have a larger capital base for >competing in it. >I believe this is the underlying economic rationale for all of the >other great Wall Street partnerships having already gone public. I agree with just about everything you say here. A firm SHOULD use the capital markets to raise cash at beneficial times. It should also make strategic decisions and acquisitions with the proceeds. It should not however use its most influential employee to help drive up prices with somewhat disingenuous interpretations of the valuation data and then come public by selling its own stock to the public for perhaps twice or more what the traditional valuations and recent deals says it's worth! It is the fiduciary responsibility of the investment banks to make offerings at prices that well informed business people would deem fair. My view that Goldman's interpretation of the valuation data is highly suspect is not unique. Many newsletter writers have written on the subject.

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