Tuesday, April 14, 2009
All that Glitters is Not Goldman...
The old adage is "All that Glitters is not gold." However, it appears that all that glitters is not Goldman Sachs. After a one-day sprint that sent the stock up over $130.00, today the stock drifted back to 117.00+. For some, it is just a bit of dollar cost averaging in a retirement account, for others it is a pinch in a financial sector which in many ways, could do no wrong. This isn't to make light of phenomenal earnings reported the day before its new stock offer. But it is only a closer look that the over-optimistic nature of those figures who manipulate the market for personal gain. Here are a couple of facts to consider:
1. Goldman is still attempting to raise capital to "repay" a portion of TARP funds.
2. Warren Buffet had a vested interest in seeing his warrants hit an ITM strike price over 114.00 and undoubtedly he sold. (See Image)
3. A large portion of revenue GS reported can be attributed to AIG's payout on losses. (Government subsidized).
4. An easing in FASB accounting standards undoubtedly played a role in these numbers.
5. Questions are currently being raised as to where/how future GS earnings will be attributed to...
6. What is the true value of GS now that shares are diluted?
These are some of the questions that we may continue to pose to the Wall Street elite this week. Rest assured, while BAC is scheduled to report this week, at the bare minimum event he most upbeat analysts are questioning basic earnings of this lovely, if not the entire sector. One thing is for certain. If the inquiry into BAC's TARP access proves to be a scandal, or BAC shows the need to raise additional capital, Ken Lewis is GONE!!!