Goldman Sachs Rules The World? Have You Looked At Their Stock Price Lately?

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By EconMatters

Independent trader and professional speaker (according to the bio page on his web site) Alessio Rastani caused quite a stir this morning when he went on BBC and said the following: 

".... the market would crash as it was now ruled by fear and that all the big players in the field know that the market was toast....This is not a time right now for wishful thinking that governments are going to sort things out.  The governments don't rule the world, Goldman Sachs rules the world."

Guess working for Goldman Sachs (GS) is probably every trader's dream gig.  And Rastani does not seem to have any GS association. So that probably explains at least in part his apparent idolization of Goldman Sachs.

Well, I'm not sure if he's looked at GS stock price lately.  Quite simply, if Goldman rules the world where governments around the world fail, then GS stock price should not look this ugly -- down almost 50% -- in the past 24 months:

 

Chart Source: Yahoo Finance 

 

In the same BBC interview, Rastani also said, 

"Personally, I've been dreaming of this moment for three years. I go to bed every night and I dream of another recession."

Here are some of our thoughts on that:

  • There are many other dreams and goals to be had in life, and 
  • Be careful what you wish for, because you might get it.  

The last financial crisis we had in 2008 brought all the Wall Street big banks, including Rastani's idol and God's Worker--Goldman Sachs, to the brink of total destruction (see the chart below with GS stock price dip in 2008) if not for the Fed and the bailout funded by the American taxpayers money.     .

 

Chart Source: Yahoo Finance

 

So no, the odds are extremely good that Goldman will not rule the world should there be another financial crisis and crash, and U.S. taxpayers could really call it 'God's Work' if GS and other Wall Street banks would not require yet another bailout.

As for Rastani's advise to move money into treasuries and dollar, it is a little late for that as treasuries and US dollar have become overbought, partly from traders front running the Fed's Operation Twist.  That means right now is unlikely a good time to jump into that trade.

On the other hand, with his the-end-of-world-crash prediction, Rastani seems to imply shorting the market would "make a lot of money from this".  However, the markets are already off roughly 25% off their highs, then amid earnings momentum in the tech sector (e.g. Apple, Amazon), and that 2012 is an election year where Washington would throw everything including the kitchen sink into the economy, it remains to be seen if shorts would necessarily come out ahead.

The moral of the story is that it looks like talking gloom, doom and "market crash" on TV is the surest way to get the 4-minute fame and quoted across mainstream media.  Last we checked, Google search on "Alessio Rastani" turned up 5,280 results in 0.08 seconds, while Goldman Sachs is looking to cut jobs in order to save $1.45 billion.  So does Goldman really rule the world?  You be the judge.   

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Economy , US Markets

Referenced Stocks: GS

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