If Goldman Rules the World, Why Not Buy Shares?

Goldman Sachs (GS) has been at the center of several global conspiracy theories, especially since the financial meltdown. I had previously highlighted a heavily anti-Goldman website and their legal maneuvers meant to quell dissent. On Tuesday I came across this article and set of videos published in Rolling Stone basically blaming Goldman Sachs for the creation, manipulation, profiteering and crash of every bubble we've seen recently. The article is interesting to say the least. Contrary to the claim that Goldman has the power structure in their pocket is this massive fine they were hit with for their role in the housing crisis, but in general, Goldman did emerge from this recent collapse relatively intact.

While I had admonished those citing speculators as being responsible for the increase in oil prices and have since hedged my gas prices personally, if there is anything to this notion that Goldman rules the world, if you can't beat 'em, join 'em, right? I was thinking about who survived the crisis and who didn't...who can repay TARP and who can't...who benefited from the bailout via counterparty passthroughs from AIG that otherwise would have decimated them...and then I took a look at their chart vs. the general markets.

click to enlarge
Goldman has outperformed the S&P500 in stellar fashion since launch to the tune of a 100% Gain over the past 10 years vs. a loss of 37% for the S&P500. That's hard to believe, but yes, we're down that much over the prior 10 year period. As naive and elementary as the question is, it begs asking:

If Goldman Rules the World and will continue to do so for the foreseeable future, why not hold common shares?

Disclosure: I have no position in GS at the moment.

Comments

[Keithpirelli:]

This bank that manipulates everyone and everything for their own pecuniary advantage,and you imagine the solution is to buy their shares? Perhaps invest in nucleur weapons manufacturers,what is the difference,if we are all screwed anyway.No, one day the likes of the usarers at Goldmans will be extinct and history will wonder how we ever tolerated them and their manipulations for so long.

Jul 08 11:19 AM

[KirbyJF1:]

NEW YORK (Reuters) - The purported theft of a Goldman Sachs trading platform threatens to cost it millions of dollars, a prosecutor told a court, but so far the bank has not reported damage to its business..............He added that because of the way this software interfaces with the various markets and exchanges, the bank has warned it could be used to "manipulate markets in unfair ways."

Now you know how Goldman pronounces set targets as it programs trading to mimic chart patterns & either pushes the stock up or down to meet their targets. Then they set the hook, just like a fisherman. Oh by the way if goldman does the manipulating , thats okay as they have a Godly purpose & thats for all Goldman employee's to make a million apeice. All in my Opinion.

Kirby

Jul 08 12:24 PM

[Cushman:]

Next year Obama will take a page from Teddy Roosevelt and play Trust Buster. Those who were deemed too big to fail will be targeted. GS will soon be dismantled for their obvious hand in the world financial crisis.

That's the reason to avoid GS. Tea Parties are being replaced with Investment Bank Jail Parties.

Jul 08 12:49 PM

[Graham and ...:]

Goldman isn't good enough to rule the word.

But it is "good enough" to put others out of business.

Then it will blow itself up, like it almost did last year.

Jul 08 12:51 PM

[Graham and ...:]

"The fisherman muddied the water. That's how he hooked the trout" (Schubert).


On Jul 08 12:24 PM KirbyJF1 wrote:

> NEW YORK (Reuters) - The purported theft of a Goldman Sachs trading
> platform threatens to cost it millions of dollars, a prosecutor told
> a court, but so far the bank has not reported damage to its business..............He
> added that because of the way this software interfaces with the various
> markets and exchanges, the bank has warned it could be used to "manipulate
> markets in unfair ways."
>
> Now you know how Goldman pronounces set targets as it programs trading
> to mimic chart patterns & either pushes the stock up or down
> to meet their targets. Then they set the hook, just like a fisherman.
> Oh by the way if goldman does the manipulating , thats okay as they
> have a Godly purpose & thats for all Goldman employee's to make
> a million apeice. All in my Opinion.
>
> Kirby

Jul 08 12:52 PM

[DaMamba:]

I am afraid that there is just no simple solution for this,because the peaple who are in power have also a lot more weapons like we do.And with weapons i do not mean guns,but the media,money,attorneys etc.And if all those fail,there is still the police and the army and the stupidity of the grater masses (thanks to a bankrupt educational system,wich is no coincidence)

Jul 08 01:54 PM

[JSArbitrage:]

There are a few reasons:

(1) Who really understands exactly how Goldman makes money? Some people are comfortable investing in black-boxes and some people aren't.

(2) Whether Goldman succeed in what could be called the most significant case study on regulatory capture in American history is moot if Goldman overpays their employees leaving equity holders with little earnings of their own. In other words, even if the most powerful company in the world makes X, if it pays out (X*.999...) to its employees, investing in the common makes little sense.

Jul 08 04:58 PM

[DaveW:]

Why? Because there are a myriad other ways of getting significant portfolio gains other than going long the oligarchs who sold this country and it's people out.

Jul 08 08:03 PM

[an american:]

if GS is smart enough to consistently rip off the government with willing hands to write the checks ... much less the taxpayers ... i'd say they may be smart enough to rip off the shareholders as well.

Jul 09 11:35 AM

[gotribe:]

Do any of you even know what GS does? You think a freaking RS reporter has even 1% of the knowledge required to assimilate the financial data and make an analysis about how one company trades the global markets? Buy GS stock and enjoy your gains.

Jul 18 09:29 PM