Goldman Sachs: Is It All Just Good PR?

Dec.23.07 | About: Goldman Sachs (GS)

Goldman Sachs (NYSE:GS) released their year end numbers and proved to the market that they are the smartest guys around. They bet the right way on the sub prime mortgage products and scored lots of home runs. Most everyone else is struggling, recapitalizing and restaffing key executive positions.

Goldman compensation costs remained at 44% of revenues for the past two years.

So if these guys are the champions, why has the stock only appreciated from $198 to approximately $209 over the past twelve months? All commentary and analysis indicates Goldman has bested the street and will continue to do so. I know all the other comparable ibanks are down, so relatively speaking, Goldman Sachs looks excellent.

But if you are beating up the other ibanks for problems and Goldman Sachs has it right, you would think their valuation would be proportionately higher. Sounds like the market is not believing the hype at this point.