Okay, so I wrote in the run up to Goldman's earnings that the stock was a good buy on the gut reaction sell/short on the back of news of the SEC's lawsuit. My basic intuition was twofold: the case seemed quite bunk (a feeling that has been reinforced since); and even if Goldman is found guilty, the approximately $14B hit to their market cap was a large overreaction. My expectation was that Goldman would surpass earnings expectations by a mile and they did: EPS of $5.59 vs expectations of $4.16 (beating by approx. 40%). The gross figures were revenues of $12.8B, $7.4B of which was from Fixed Income, Commodities and Currencies (FICC), and profits of $3.29B. Enormous quarterly numbers, but the stock refused to budge.
Clearly the trade I recommended was not much good (although had you bought at open Friday and sold at open Tuesday - the day of the earnings report - you would have netted a couple percent). People who seek to improve themselves look at their decisions, and aided with the benefit of hindsight they isolate where they went wrong in order to avoid such mistakes in the future. My mistake hereis quite clear. The overriding negative sentiment from the SEC case (no matter how bunk) made it impossible for this stock to bounce nicely on a very strong earnings report. The lesson? In the short term, perceptions (animal spirits) outweigh fundamentals. I feel very strongly that Goldman will continue to outperform and my ideas will be vindicated in the long run.
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