Goldman Sachs: Doing The Opposite Of What It Tells Clients Again?
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Goldman Sachs: Doing The Opposite Of What It Tells Clients Again? |
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"Always remember, markets take people out. That' s one of the glories of capitalism.” – Darla Moore
Taking a page from Darla Moore, one of our generation’s most successful investment bankers and a classic American Horatio Alger story, allow us to posit that perhaps the greatest glory of finance is that unlike other industries, the smallest player can go toe to toe with the industry’s goliath – all that matters in finance is the quality of the idea. In that vein, this month Goldman Sachs, one of Wall Street’s goliaths, doubled down on its recommendation to clients, proudly saying that 0% gold in portfolios was their recommended allocation. Like other wirehouses who guide clients in a similar manner, Goldman’s perspective was disingenuous at best. In this case their words were reminiscent of Jeremy Siegel’s biased hit job on gold. Readers of Siegel’s Stocks for the Long Run may recall that Siegel chose to only consider U.S. stocks in his comparison of equities vs. gold, ignoring the returns of overly indebted nations, a huge flaw as he cherry-picked the U.S. bourse when it was the world’s dominant exchange. At the same time, Siegel never mentioned that gold’s price was fixed for more than 70% of his study. Calling the world’s most dominant exchange as a “proxy” for stocks vs. an asset that was fixed in price – what could be less fair? |
