Panzner on Goldman Sachs' "Smart" Money

Editors note: Jr Deputy Accountant recently interviewed Financial Armageddon's Michael Panzner for accounting tabloid Going Concern and the 2 part piece may be found here and here. If you are familiar with his work, you already know that Panzner understands all too well what got us into this mess and in a recent post on Financial Armageddon, he goes after the Goldman rats ("crackerjack Goldman analysts" isn't exactly flattering after all). The markets continue to follow the rats - so what happens when they lead investors right off the cliff?

Goldman Sachs: The "Smart" Money?!

U.S. stocks rebounded today, aided by a rally in financials. Why was the group strong? Because a team of analysts at a well-known Wall Street firm upgraded the large banks sector. And why did they do that? Bloomberg gives us the lowdown in "Wells Fargo, Biggest U.S. Banks Raised by Goldman":

Wells Fargo & Co., JPMorgan Chase & Co. and the biggest U.S. banks were raised to “attractive” from “neutral” by Goldman Sachs Group Inc., which said share prices don’t reflect prospects for earnings growth.

“We believe this difference in earnings power hasn’t been fully reflected in share prices,” New York-based analysts led by Richard Ramsden wrote in a note to clients today. “We estimate that normalized earnings for large banks are 39 percent higher than in 2007 despite the 36 percent decline in share prices.”

Wow, pretty powerful stuff, eh? Then again, maybe not. You see, if you go back and look at what Goldman said in late-January, when most bank stocks were trading at far lower levels than they are now, the firm wasn't exactly upbeat on the group.

Read the full article - click here [recommended reading, JDA]