Bulls ‘n Bears. Goldman Sachs vs. Google

Yesterday, after the close, there were two important news events.  One was bullish and the other bearish.  

The Bullish news:  The SEC, in a decision that is beyond my comprehension, accepted a bribe from allowed Goldman Sachs to settle the case pending against it for the amazingly low price of $550 million.  Does anyone at the SEC understand how many billions of dollars – cash that once belonged to the American taxpayer – was handed to Goldman?  Is there no sense of justice at the SEC?  Is there no sense of decency?

Considering only the settlement with AIG – in which they were paid 100 cents on the dollar for paper worth less than half that amount – makes the SEC settlement look trivial in comparison.  I guess that's because it is trivial. 

This is an amazing coup for the company, and the stock has moved significantly higher in after hours trading, 

Had they been convicted, there is no telling what would have happened.  Surely their chief guy, Lloyd Blankfein would have lost his job.  Now, he is absolved.  Goldman Sachs, the poster company of bad behavior suffers no punishment.  No punishment.  For mere pocket change that get to go on as before.  If convicted, they could have been forced out of business. 

And now there is no admission of wrongdoing.  It's a mockery of fair play.  It's true, the banks own the government.  I thought they only owned Congress.  How naive of me.  They own the SEC and probably the White House as well.

This result from a Democratic administration is incomprehensible.  Even under George W Bush the punishment would have been larger.  Perhaps a round number – one billion dollars – just to make the public believe it was a severe punishment.  This time the SEC didn't even pretend to seek justice.  These people are idiots. 

I've said it before and I'll say it again.  The SEC has too many ignorant lawyers.  It needs people who trade for a living and perhaps some intelligent civilians.  This settlement is a joke.

The bearish news is that Google's earning announcement disappointed Wall Street.  The stock was down sharply in after hours trading.

It will be interesting to see if either of these stocks leads the market in a significant move today, expiration Friday.

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7 Responses to Bulls ‘n Bears. Goldman Sachs vs. Google

  1. Andy 07/16/2010 at 7:59 AM #

    As a borderline conspiracy theorist, I’m becoming more and more aware of the “banks own government” phenomenon. Perhaps I’m over-simplifying, but I don’t think it was just coincidence that the recent market slide was halted and now reversed after the ‘we should double down’ letter that was sent by Goldman to its investors last week. Could this have been a ‘display of power’ that Goldman used to bribe the SEC into giving it a lighter penalty? On an aside, do you recommend any particular banking ETFs?
    I was also wondering how many hours or how many times a day you spend watching the market/managing your trades. When I have spreads that are getting relatively close to expiration I find myself logging in almost every hour… but I feel this is far from efficient. Do you have a daily routine, or does it depend on the ‘time of the month’?

  2. Mark Wolfinger 07/16/2010 at 8:11 AM #

    Andy,
    Interesting conspiracy theory. I think government acts too slowly and inefficiently for your scenario to have validity. Too many people would have to know and the story would leak.
    I never recommend anything. I don’t even pay attention to stocks and ETFs. Just follow RUT. Amazing isn’t it. This is not how a trader is supposed to work. However, these days I am far more of a writer than trader.
    My computer is on all day and I sit in front of it – probably >12 hours per day. All I do is via computer – blogging, writing, etc. I watch the markets often – but because I have smaller positions these days (just when the trades are going very well), I only check in looking for new opportunities. Probably twice per hour.
    But when looking for new trades, I may spend a solid hour.
    Not in any trouble, not paying a lot of attention to current positions. But I do enter exit orders every day. When I had a much larger portfolio, I watched constantly.

  3. Jesse 07/16/2010 at 9:02 PM #

    There’s always fraud exists inside the investment banks as described in Frank Partnoy’s book “FIASCO”. I just don’t know why there’s still so many investors like insurance cos, pension funds etc doing businesses with those investment houses? That’s why I always stay away from any fund investments, after all, it’s better to rely on one’s own judgment than putting one’s hard earned money to those so-called professionals!

  4. Mark Wolfinger 07/17/2010 at 12:25 AM #

    Hi Jesse,
    The reason is that far too many people are financially illiterate and not only cannot possibility handle their own investments, the bank and fund managers spend big bucks attracting innocent investors.

  5. steve 07/17/2010 at 9:57 AM #

    The SEC is just like all the other “regulatory agencies”, utilities, insurance, FDA etc. They are staffed with flacks from the industry the agency is supposed to “oversee.”
    These agencies are designed to make the public believe that someone is really watching out for them, like a “cop on the beat!” When in reality, these agencies help protect the major players from competition and preserve their privilege.

  6. Mark Wolfinger 07/17/2010 at 10:50 AM #

    This administration promised more and I was counting on that to happen.

  7. Donald W. 07/18/2010 at 8:35 PM #

    Yes, well I put my trust and faith in the Republican administration. What a nightmare that turned out to be.