A sputtering economy, implosions at financial institutions, or just plain bad management -- on any given day, investors can name a number of reasons to sell a stock. Yet while panic is never beneficial to investors, it's good practice to play devil's advocate with investments from time to time.
In Motley Fool CAPS, more than 125,000 members have weighed in on nearly 5,400 stocks, sharing bullish and bearish opinions alike.
In the case of investment-bank-turned-bank-holding-company Goldman Sachs (NYSE: GS ) , 5,168 members have offered their opinion on its chances for success. I've already plucked out some of the bullish rationale backing Goldman Sachs today, so here are three counterpoints to consider, courtesy of CAPS:
Out with the old: Like Morgan Stanley (NYSE: MS ) and American Express (NYSE: AXP ) , Goldman made the switch to bank holding company, where it'll be in closer competition with banks like Bank of America (NYSE: BAC ) and Wells Fargo (NYSE: WFC ) . Unfortunately, the move will also greatly reduce its most lucrative practice (highly leveraged internal trading), which won't fly under the new status. Many investors believe that the business model that brought Goldman insane profitability in the past won't work any longer.
Writedowns and losses: In a period when Lehman Brothers went down and Merrill Lynch (NYSE: MER ) was swallowed by Bank of America, Goldman posted its first quarterly loss as a public company, ending up $2.1 billion in the red for the fourth quarter. Writedowns and losses on investments, bad loans, and the like reached more than $5 billion for the quarter, more than it had reported in the last two years -- ending a long, profitable run.
High uncertainty: A high level of uncertainty still looms around banks and companies that hold potentially toxic assets that are difficult to accurately value. To reflect the continued deterioration of the changing banking industry, Standard & Poor's recently cut its credit rating on Goldman and UBS (NYSE: UBS ) , among others, leaving investors more questions than answers.
Of course, Goldman Sachs has survived and thrived despite dozens of obstacles in the past. But the question about whether the company can recover in these unprecedented times is why CAPS is such a great resource to augment your own analysis.
To see what the very best CAPS members are saying now about Goldman Sachs, just click on over to Motley Fool CAPS and have a look.
More Foolishness:
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