Lioness Associates, Inc.

Economic & Corporate Risk/Yield Reports

August 5, 2012 Goldman Sachs (GS) - Risk/Yield update for 2012

Our last article on Goldman Sachs dated April 12, 2012 (below) indicated that most of the increase in stock price had happened at that point and that much of the time leading up to the end of summer would be on "getting the house in order".  Looking at the comparison chart of GS and the DOW at the right (Yahoo Finance) seems to support the projections of the original GS 2012 Delta Core/Transient graph provided in April.

The original GS 2012 Risk/Yield and GS 2012 Delta Core/Transient graph both suggest that the period from August to September of 2012 has a momentum into yield but,  as stated in the original article, there may be some "staleness" associated with it and therefore, may not provide a stable base to move ahead.  There are some configurations that indicate that new investors may be interested in this company in the early part of September but, this trend also does not appear to have "staying power".

  

April 12, 2012  -- Goldman Sachs Risk/Yield for 2012
Goldman Sachs along with the rest of the financial banking community has had a favorable tailwind from a beneficial astrological configuration since the beginning of the year and the gains in the banking sector have been noticeable, approximately 15% gain for the $XLF as compared to an approximately 5% gain for the general DOW.  Note, this beneficial astrological configuration will soon be moving on to another sector - notably telecommunications, railroads, cars, software and so on. 

Currently, Goldman Sachs and other banks in the financial sector are faced with having to deal with new financial regulations as a result of the financial events since 2007 and this will impact this sector.   Refer to JPMorgan Chase & Co's 2011 Letter to Shareholders and the impact of new regulations.

Goldman Sachs has another issue that has become noticeable -- dealing with the "bad publicity" caused by a former employee (reference link here).  This negative publicity puts clients in a difficult position of keeping the same level of trust in the organization while at the same time experiencing a loss of faith that their interests are the primary goal. With this in mind, Goldman Sachs is likely to focus on repairing it's relationships and "putting it's house in order" rather than forging ahead during much of the year - this is not to say that it's going to languish, sometimes a step back is needed to leap ahead. Having said that, I'd expect that the executive team will be tightening internal rules and policies which will result in an "all work and no play" environment.

While the GS Delta Core/Transient 2012 graph depicts an uptick near the August/September period, this will also coincide with an expected upturn in the USA economy which is shown in the combined USA + GS Delta Core/Transient graph (the USA graph without the combined GS data is also shown on the home page).  During this period, a detailed look at the astrological configuration for Goldman Sachs while not negative, is not suggestive of a company that is exceeding expectations rather of one that is attending to necessary maintenance. Normally, a momentum surge of 400+ points into the "yield" area of a graph (as occurs in the Aug/Oct 2012 period) could be suggestive of a move in price especially since the USA economy also looks to have a surge at the same time but, in this case, the data points behind the surge could be considered "stale" and may not be able to generate required interest for a significant move although, if the general market moves up then the rising tide will lift all boats. 
 

  


 
        GS Delta Core/Transient 2012 graph


         GS Risk/Yield 2012 graph


        USA + GS Delta Core/Transient 2012 graph
 
Disclosure as of 4/12/2012 - Goldman Sachs (GS) is not part of our portfolio at this time.