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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Madharry who wrote (45467)	11/16/2011 3:11:07 PM
From: Spekulatius	Read Replies (1) \| Respond to of 78659

re GS - about half a year ago, we had an exchange on GS and were on opposite sides Message 27496317 I was more bullish then and you were skeptical. you turned out to be correct but not for the right reasons - the reason GS stock is down is because the earnings outlooks sucks - they are supposed to make 5$/share now versus 12-15$/share then and next year may not look much better. I agree that tangible book value and GS good risk management are positives but it's not clear to me if they can make 20$ in earnings /share like they did around 2005 (with half their current book value). I believe that proprietary trading is dead and that is where GS used to excel. It will be interesting to see, if they keep the bank holding umbrella or not. if they drop it, they loose access to short term funding from the Fed, which is very handy in emergencies. Without access to the FED window, they need to restructure their liability side and and refinance LT, which is going to cost them, or roll the dice that nothing bad happens in the financial system. I don't know, i see a broken business case much more so than a tarnished reputation ( which is a factor too). They need to restructure imo and dramatically reduce the size of their balance sheet, imo. it will mean less earnings for the stub GS but since it is trading below tangible book, this may well result in a windfall for shareholders if done on an elective basis. If it's done in a pinch, probably not. I think I am buying into this, if a scare in the financial markets breaks out and GS goes much lower. Right now, I am not buying any financial, unless a scare breaks out and we see lower prices ( a fairly high probability event, imo).