In the interest of full disclosure, I admit that I spent 8 years employed by the bank in a single division. What I learned during my time there is that there is not widespread cheating (at least when I was there) and the firm is not even close to always right. Admittedly, my experience may have been colored by my employment in a single division as well as the fact that it’s not possible for an owner to know everything about his business… to say nothing of a mere employee. Still the losses that we took at times made it clear that we weren’t always right and that the firm’s strength lay in its management of risks as opposed to the avoidance of risk by cheating.
What’s my long-winded point you ask?
Goldman Sachs was full of smart, talented, driven folks and the company managed to get quite a few things wrong (still does). In May 2013, I posted an analysis of 11 stocks that Goldman analysts deemed significantly “overvalued” on a fundamental basis and thus likely to retreat in the near term. The post was a video of the Business Insider article detailing Goldman’s calls as well along with a look at the current charts and my thoughts on the matter.
As I write this it’s 31 August 2014. Take a look at the video in the post and see what you think about the fundamental versus price argument. Neither is perfect… however, using price as the ultimate determinant is far more effective and consistent than using “just the fundamentals.” That is, of course, my opinion. Feel free to disagree but please send me your thoughts, comments and criticisms.
P.S. One more thing… I can promise you that Goldman lost very little money where they were wrong. The secret sauce at Goldman Sachs is not that they cheat… but rather that the firm does not stay wrong for very long… ever. You could do worse than following their lead…