Think Goldman 'Rules The World'? Check Its Chart

Sep.27.11 | About: Goldman Sachs (GS)

Independent trader and professional speaker (according to the bio page on his website) Alessio Rastani caused quite a stir this morning when he said the following this morning on BBC:

... the market would crash as it was now ruled by fear and that all the big players in the field know that the market was toast.

This is not a time right now for wishful thinking that governments are going to sort things out. The governments don't rule the world -- Goldman Sachs (NYSE:GS) rules the world.

I guess working for Goldman Sachs is probably every trader's dream gig. And Rastani does not seem to have any GS association (our Google query did not turn up much about the man at all). So that probably explains, at least in part, his apparent blind idolization of Goldman Sachs.

Since he is supposed to be a trader, I'm not sure if he's looked at GS stock price lately. Quite simply, if Goldman rules the world where governments around the world fail, then GS stock price should not look this ugly -- down almost 50% in the past 24 months:

Chart Source: Yahoo Finance
Click to enlarge

In the same BBC interview, Rastani also said:

Personally, I've been dreaming of this moment for three years. I go to bed every night and I dream of another recession.

Here are some of our thoughts on that:

  1. He needs to get out more, as there are many other dreams and goals to be had in life, and
  2. Be careful what you wish for, because you might get it.

The last financial crisis we had in 2008 brought all the Wall Street big banks -- including Rastani's idol and God's worker Goldman Sachs -- to the brink of total destruction (see the chart below for GS stock price dip in 2008) if not for the Fed and the bailout funded by the American taxpayers.

. .

Chart Source: Yahoo Finance
Click to enlarge

So in fact, the odds are extremely good that Goldman will not rule the world should there be another financial crisis and crash, and U.S. taxpayers could really call it "God's work" if GS and other Wall Street banks would not require yet another bailout.

As for Rastani's advice to move money into Treasuries and the dollar, it is a little late for that, as they both have become overbought, partly from traders front-running the Fed's Operation Twist. That means right now is unlikely a good time to jump into that trade.

On the other hand, with his the-end-of-world-crash prediction, Rastani seems to imply shorting the market would "make a lot of money from this." However, the markets are already roughly 25% off their highs; amid earnings momentum in the tech sector -- e.g. Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) -- and because 2012 is an election year where Washington would throw everything, including the kitchen sink, into the economy, it remains to be seen if shorts would necessarily come out ahead.

The moral of the story is that it looks like talking gloom, doom and market crash on TV is the surest way to get the 4-minute fame and get quoted across mainstream media regardless of the person's credentials and/or if the statement even makes sense.

Last we checked, a Google search on "Alessio Rastani" turned up 5,280 results in 0.08 seconds, and one related post at Zero Hedge has gotten over 77,000 hits with 666 comments in less than 12 hours.