Sunday 1 April 2012
Conviction Buy: Goldman Sachs
I have not owned any bank shares since 2010 when some dabbles with RBS and Barclays netted me good returns in what were interesting times. Since then with the Financial and Euro crisis being back to back it has not seemed sensible to look to closely at shares in financial services companies.
However, with the recession in the US now over and the end of the crisis in sight at last (for 2013/14, 7 years after 2007 as predicted), now must be a time to take a closer look at some decent opportunities. Now GS has come in for some stick recently after an ex-employee wrote a very nasty letter about the culture at the bank. Of course, the bank has looked thoroughly into this and found that none of it is substantially true as you would expect.
In the recent past too, GS has come in for stick in both its pivotal role in the Sub Prime crisis and also for the role it payed in helping Greece to get into such a poor debt position. Not forgetting the insider trading case of a particularly dishonourable ex-employee; but of course, the Bank itself did well out of these deals and did not break any laws.
Therefore as an investment, they are definitely the sharpest of the bunch in the bulge bracket investment space and with the current weakness created by the hysteria over the letter, this should be a good time to invest in such a solid, respectable business.