When investors use brokers who have the ability to invest on their own, and not solely on the deposits of their clients, one always has to be wary of what they tell one person, and then do with their own funds.
Just as the clients tied with MF Global.
For Goldman Sachs clients, the proof is in the history of what their brokers tell their clients to purchase, while at the same time, buying the opposite bets in their primary desks or hedge fund partners. An announcement on December 9th by Goldman Sachs showed that they were publically bullish on European banks and stocks, and just three days later, that advice, as well as their upgrade from underweight to neutral, has proven once again to be false analysis.
On Friday, following the announcement from Goldman that the firm’s had just turned more bullish on European financials raising banks from Underweight to Neutral, we said: “Goldman has just started selling European bank stocks to its clients, whom it is telling to buy European bank stocks. Said otherwise, the Stolpering of clients gullible enough to do what Goldman says and not does, has recommenced. Our advice, as always, do what Goldman’s flow desk is doing as it begins to unload inventory of bank stocks. Translation: run from European bank exposure.” Sure enough: European banks (as per BEBANKS) are now down 3.84% today alone, or -1.5% from the Thursday close, while the general MSCI Euro Fin sector, EUFN, is down 6% today. – Zerohedge
After the 2007 and 2008 credit crisis, Goldman Sachs, along with a number of strictly investment banks, filed for full commercial status so they could borrow funds directly from the Fed discount window. Upon doing so, Goldman Sachs had access to billions of dollars to use in making bets for and against the economic recovery. In fact, during one quarter in 2010, Goldman Sachs publically said they did not have a single losing trade in billions of dollars worth of equities transacted.
One must also remember that Goldman Sachs is the Federal Reserve, as it is one of the controlling partners in the private central bank that formulates the nations currency and economic policies. Coupled with the fact that many previous Treasury Secretaries, including Timothy Geithner and Hank Paulson, were CEO’s or members of Goldman, and you can see how easy it is for the bank to know information before it affects markets and economies.
Retail investors have been wary of the stock markets since the decline and recession of 2008, and many have stayed on the sidelines while putting their money elsewhere. With new HFT computers running 75% of all trades on the exchanges, and investment banks having the capabilty to invest outside their own customer accounts, it is a wise axiom to invest as Goldman Sachs does, and not what they tell the public, or their clients.