A Rare Opportunity GS

I seldom make recommendations on stocks outside my general trading rules, but sometimes the bait is so good it is hard to ignore. The bait this time is Goldman Sachs, symbol GS. Goldman is the largest, most successful, most profitable, most wanted to be employed at, top of the heap American investment bank. If you graduate from a business school you have hit the big time if you can sometime in your career work for Goldman Sachs. The pay is out of this world and the enhancement of your future assured as well. Goldman rules Wall Street like no other investment bank. As such they can pick and choose the best and brightest to work as associates. Most importantly Goldman Sachs is the most politically connected and politically protected firm in the entire country. Some people actually call them Government Sachs with good reason. The firm regularly supplies treasury secretaries for the US and they can get Barack Obama's ear anytime since their associates contribute hundreds of thousands of dollars to his campaign.

Goldman has got into some trouble lately when the US justice dept. opined that GS was the a guilty party in the sub prime collapse. Democratic Senator Carl Levin got in on the pounding and just came right out and said Goldman was THE cause of all the recent housing bubble troubles and needed to be prosecuted. Now there likely is some truth here as Goldman was deeply involved in the sub prime crisis and got a big time bailout when TARP was done and the even more TARP bailout when the bailout money of another big insurance firm AIG was literally handed over to Goldman when Goldman said they owed them the money. Sorta nice to be able to dip into the honey pot twice and only have to pay back once. But that is another story for another time. Goldman also is said to have sold sub prime securities to their customers and then the firm used their own assets to bet against their own customers. Goldman is now having to consider if to thrown their current chairman to the wolves in hopes to save their bacon. Again, I have no idea if any of this huffing and puffing is going to lead to anything since remember they have Barack's ear and likely protection. Barack might huff and puff himself about Wall Street fat cats, but the fella knows who butters his bread and has in the past protected these people. Of course in the world of political pressure anything is possible and Goldman might end up being hit with big penalties and such.

My opinion is this political pandering will blow up some more and then Barack will place a phone call to Carl Levin and Eric Holder and tell them to produce some milktoast prosecution or prepare for some serious butt kicking from the President himself. Carl likes the attention and like all senators is doing some ego massaging here too. Maybe a few indictments and such, but basically a slap on the wrist is what I expect will be the results of all this talk.

(By the way I am an equal opportunity political pounder. Yes, I criticize Obama on his financial policies, but I did the same for Bush. I am still hopping mad about his placement of tariffs on steel during his term. That little diddy cost me some serious bucks in my Posco investment. Posco is the steel maker in South Korea.)

Now what does this have to do with a rare opportunity. GS stock has been taken out back and beaten up pretty good. The stock is down from $175 range to now below $136. It very well might go lower. Many were of the opinion that GS was under priced back several months ago at $175, since it spent many days before the economy crashed well over $220. Rarely does one get a chance to buy a stock like Goldman on the cheap. So consider buying GS here or wait and see if it drifts down another $10 per share and go for it. Either way I would suspect that you will find this trade nicely profitable sometime down the road once the dust settles on this scenario.