[RT] Fw: GS story, RealTraders Email List Archive

"Investors are now wildly confident that Goldman Sachs will be one of the best performing financials of 2009.

"The Dow managed to end the day with less than a percent loss. The S&P 500 and NASDAQ both pulled off small gains.

"Curious how the markets work, though, isn't it?

"In reality, Goldman benefited from a quirk in its new reporting schedule. 'Its fourth quarter ended in November 2008,' reports the Financial Times, 'but after converting to a bank holding company last year, Goldman adopted a calendar-year earnings period starting in 2009. As a result, the company did not have to include December in its first quarter earnings, a month in which it sustained $1.3bn in pre-tax losses.'

"So Goldman actually made $0.5 billion in the first quarter. But who really cares? The investment bank is up 54% year to date!

"And since their stock is so 'strong,' Goldman bigwigs confirmed that they would move forward with a $5 billion secondary stock offering... the proceeds of which will be used to pay back TARP loans. Work it.

"Oh boy, 'buyer beware,' warns our short side specialist Dan Amoss. 'The most responsibly managed banks should survive this downturn because cash flow from good loans should roughly offset the losses from souring loans.'

"'Regulators will probably grant forbearance, meaning that they'll look the other way while they allow bank capital levels to get dangerously low in 2009 and 2010. But just because many banks will avoid FDIC receivership doesn't mean the stocks will be good investments.'"