This move in Goldman Sachs (GS) can't be ignored any longer. The stock has been galloping toward its book value of $119 ever since it reported. It withstood a gigantic downgrade by JP Morgan this week, which said it may have capital issues and is certainly earnings challenged.
Yet, there's a story today about how Goldman owns a big chunk of Facebook. The company might be part of the deal. There are two pieces of business that weren't in the cards when we started thinking about the first quarter of 2012.
Plus, we know that Goldman Sachs has made it very clear that it is not going to lose all that much -- if anything -- if Greece goes under.
I think Goldman is in the sweet spot. It saved tens of millions of dollars by having partners retire. These retirements are immediately additive.
Plus, I think that the compensation for the younger people is quite different from what it was when I was there. You aren't going to make as much money as you thought in those first couple of years.
I believe people will be pleasantly surprised when they see the rest of the year unfold. There will be new business lines we don't know about, initiatives that make money that aren't in the numbers, and the hoopla over the changes mandated from Washington will have died down.
Don't overlook the possibility of Goldman Sachs taking advantage of the vacuum that the European banks are giving them by pulling back and dumping good divisions.
It might be Goldman's time -- just when it is most hated.
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