Everyone makes mistakes. Some are embarrassing. Some are kind of funny. Others can cost you and your investors a lot of money, leaving you with your tail between your legs.
On May 5, Goldman upped its rating on financial stocks to neutral, or market-weight (or any other term you'd like to use to mean "I'm really not sure"), and overweight for consumer stocks. But it quickly reversed those calls to an underweight rating, citing that its original analysis was "clearly wrong in hindsight.''
Sure, it's been a horror show since Goldman's May 5 call, especially for financial stocks. The Financial Select Sector SPDR
For one, Goldman didn't allow too much time for things to pan out. Anything could have happened in the seven weeks since its original call. The fact that it switched so quickly hints that Goldman was either trying to call short-term movements (about as predictable as Keno), or that it gave up far too soon. Its thesis -- that bank recapitalizations and stimulus checks would help boost some sectors -- makes a fair bit of sense. Goldman will look really bad if its original call proves correct, and financial and consumer stocks rebound from here.
Give 'em a break, all right?
Even Goldman, the uber-bank that collected a windfall profit on a brilliantly timed move betting against financial products last year, is human. And surprise, surprise -- short-term trading is still an elusive trading technique.
Chin up, Goldman.
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