Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : Goldman Sachs Group Inc. NYSE:GS -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (385)	7/18/2010 7:52:08 AM
From: bruwin	Read Replies (2) \| Respond to of 411

”A synthetic derivative, .... it’s just a bet between two or more parties on specific outcomes. So it has to be originated by either a buyer or a seller. Now if GS comes to me and says we have synthetic derivative for sale do you want to buy it? I should know immediately that it was put together with significant input from the seller, otherwise I have rocks for brains. Thus to say after the fact that GS should have formally disclosed that information seems silly, and to say that GS should have disclosed who the seller was, is even more silly.” I take your point about “a bet between two parties” and about the requirement for disclosure. But IMO both GS and Paulson created something which they knew was junk, which was probably why Paulson bet so heavily against it. What GS then did, from what I understand, was to create a “favourable” impression to their clients about this junk. That doesn’t mean that their clients and everyone else should not have done their own homework about the quality, or lack of it, regarding the derivative. Indeed they should have. But no doubt many took their lead from the reputable Goldman Sachs organization, which was exactly what Paulson and GS were probably hoping they would. Anyway, it’s all in the past now. One hopes that those who fell for this lark have now learned their lesson and will, in future, use meaningful and relevant criteria in evaluating stuff, be it derivatives or stocks, before they buy it. There’s no doubt that GS, as a business, have done well in the past. Their stock went from about $65 in 2003 to over $240 in 2007. After falling back to $60 in 2008 they again rose up to over $190 in 2009. No doubt there’s upside in GS, as long as they deliver the goods going forward.