MyPrivateBanking Blog
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Posts Tagged ‘goldman sachs’

Why You Can Fool Some Investors All the Time

Wednesday, January 12th, 2011

By now we have heard all about the Facebook story and Goldman Sachs. The bank’s announcement that it is offering its private clients a chance to invest in Facebook has touched off a battle for the shares among its rich clients. The other day we had in our weekly private banking link collection a great link to Rich Bookstaber’s blog where Rich predicts that over the long-term Facebook will be marginalized for a variety of reasons most importantly because it reduces people’s personalities and disregards basic privacy rights.Whatever you may think about the future of social networks in general and Facebook in particular it seems pretty clear that right now there is a major financial hype especially about Facebook but also about a few other social media and networks which aspire to go public or at least make a buck for founders and VCs through a juicy trade sale.

Remember Yahoo, AOL or even Lycos or Altavista? Each one was a Titan of the Internet back in 1990s. Fast forward to today and Google or Facebook have taken the throne. But technologies and user behavior is changing ever faster and Internet investors should be careful with companies that are valued at $50bn, have revenues of a little more than $1bn and a net profit of around $400m. But investors are not careful. Goldman’s wealthy clients want in on the Facebook deal. At the end of the day, it’s not the investment bank who is paying if and  when the valuation will not hold up. By then the bank will long have cashed in the fees for selling private shares to investors, the IPO fees and many other charges ponied up by investors to become part of the action.

Abraham Lincoln said that you can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time. Let’s just hope that more investors will make their homework and become part of the latter group.


Goldman: Under Pressure

Wednesday, April 7th, 2010

Business Week carries a great, long story on Goldman Sachs and how the firm is been forced to defend itself against a public perception that they have been the epicenter of the global financial crisis. The magazine sums Golman’s situation up:

“Business is booming, but Goldman, which once prided itself on avoiding the ostentatious and on making money for the long haul, is a different firm, with a perception problem that mere explanation can’t solve. In committing to market-making at all costs, the firm has opened itself up to forces beyond its control. The question is: Has Goldman Sachs shorted itself?”

The article can’t answer the question whether it was Goldman who brought down AIG and whether Goldman really sold shoddy CDOs (collateral debt obligations) to its customers only to turn around and short these CDOs, effectively betting against its own clients. What becomes clear however is that Goldman,  the hallmark of global banking, is under a lot of pressure. Pressure that may translate into new regulation constraining its business model.


Goldman Bankers Buying Guns

Friday, December 4th, 2009

Is the popular uprising against Wall Street that near? Some Goldman employees obviously think it is better to prepare for the worst and get their hands on a few new guns. Not sure if this is the right way to hold on to these overblown bonuses.


Some More “Kaupthinking”…by Goldman Sachs

Wednesday, August 26th, 2009

It is December 4, 2007. The Sub Prime Crisis had already caused USD 60 billion in losses to financial institutions. All the highly paid analysts consult  their year-end-crystal balls. And here comes the forecast of stock pundit Abby Joseph Cohen of Goldman Sachs. Have fun…

“Abby Joseph Cohen, the Goldman Sachs Group Inc. strategist whose call for a year-end rally in U.S. stocks hasn’t come true, predicted the Standard & Poor’s 500 Index will rise 14 percent by the end of next year. [2008]

“Cohen, 55, says the S&P 500 will climb to a record 1,675, extending the longest stretch of annual gains since the 1980s. She joins strategists at Citigroup Inc., Bear Stearns Cos. and Strategas Research Partners LLC in forecasting the benchmark will at least reach that level in 2008.

” ‘U.S. stocks will offer moderate gains and will dramatically outperform bonds over a 12-month horizon,’ New York-based Cohen wrote in a report today. ‘Recession will likely be avoided, due to strength in exports and capital spending by corporations and governments, and thanks to a vigilant and flexible Federal Reserve.’

Cohen was finally fired as “chief forecaster” in March 2008. On August 6th, 2009 Abby Joseph Cohen declared, “the new bull market has begun”.


Is Goldman Sachs the Culprit?

Friday, August 7th, 2009

Over the last weeks there has been a raging battle whether Goldman Sachs is to blame as the main culprit for causing the financial crisis. It was Matt Taibbi, who pointed the finger towards Goldman in a long Rolling Stone magazine article. Well, Rolling Stone is not exactly renown for its insights on economic developments. Yet, Taibbi’s article created a lot of media attention, including many mainstream media as well as bloggers. The article is extremely well written, nevertheless Taibbi is dead wrong. Now, Charlie Gasparino, CNBC’s On-Air Editor, takes Taibbi’s argument apart. It is worthwhile to read how many false statements of facts Taibbi has made about Goldman and about the way financial markets work. It is a great example how uneducated our media (mainstream and online) still are in financial matters. And this might be exactly the reason why bubbles build up and go undetected for such a long time.