{"id":8790,"date":"2010-04-23T16:23:00","date_gmt":"2010-04-23T20:23:00","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=8790"},"modified":"2010-04-23T16:23:00","modified_gmt":"2010-04-23T20:23:00","slug":"goldman-sachs-charged-with-fraud-who-could-have-guessed-part-iii","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/04\/23\/goldman-sachs-charged-with-fraud-who-could-have-guessed-part-iii\/","title":{"rendered":"Goldman Sachs Charged With Fraud: Who Could Have Guessed? Part III"},"content":{"rendered":"

The firm’s history suggests its vulnerability in periods of negative social mood.
\n<\/span> (See Part One<\/a><\/span> & Part Two<\/a><\/span>)
\n<\/span><\/p>\n

By Elliott Wave International <\/span><\/h3>\n

In the November 2009 issue of Elliott Wave International’s monthly Elliott Wave Financial Forecast<\/em>, co-editors Steven Hochberg and Peter Kendall published a careful study of Goldman Sachs history — and made a sobering forecast for its future.<\/p>\n

In this special three-part series, we will release the entire Special Report to you free of charge. Part III is below. You can find the entire series here: EWI forecasts Goldman Sachs company troubles<\/a><\/strong>.<\/span><\/p>\n

Get tomorrow’s financial news today!<\/strong> To understand what that means, you must think and act independently from the crowd. Learn how by downloading Elliott Wave International’s FREE 118-page Independent Investor eBook here<\/a><\/strong>.<\/span><\/p>\n

Special Section: A Flickering Financial Star, Part III<\/strong><\/p>\n

With the market\u2019s downtrend recently in abeyance, these transgressions failed to capture the imagination of the public or the scrutiny of law enforcement. But the extreme recriminatory power of the next leg down in social mood suggests that Goldman\u2019s dealings will become a lighting rod for public discontent.<\/p>\n

In January 2008, Elliott Wave Financial Forecast<\/em> noted that Goldman\u2019s success relative to the rest of Wall Street pointed \u201cto the eventual appearance of a much larger public relations problem in the future. In the negative-mood times that accompany bear markets, conflict of interest charges will come pouring out.\u201d The recent revelations about Paulson\u2019s and Friedman\u2019s actions are exactly that to which we were referring. Additional claims against Goldman — including front-running its clients and profiting from inside information — are already too numerous to mention. As the bear market intensifies, the firm will attract scrutiny as easily as it brushed it off in the mid-2000s.<\/p>\n

Based strictly on the form of its advance, a July 2007 issue of The Short Term Update<\/em> called for a peak in Goldman shares at $234. Goldman managed one more new high to $250 in October 2007; it then fell 81 percent to a low of $47 in November 2008. The stock market\u2019s wave 2 rise brought Goldman back to $193 on October 14. Its affinity for marching in lock-step with the DJIA strongly suggests that Goldman will decline to below its November 2008 low.<\/p>\n

Another key socionomic trait is for the most successful recipients of bull-market goodwill to be singled out for special treatment in the ensuing decline. Even fellow financiers are taking aim. In a not-so-veiled reference to Goldman, one Wall Street titan said that big profits made by investment banks are \u201chidden gifts\u201d from the state, and resentment of such firms is \u201cjustified.\u201d Let the bloodletting begin.<\/p>\n

Let the Buyers (of Stock) Beware<\/strong>
\nGoldman\u2019s heavy involvement in the hedge fund industry is another bull market asset that will become a huge liability in the next wave lower. In January, when some minor insider trading charges were brought forward, Elliott Wave Financial Forecast<\/em> stated that they were only a first puff of \u201cwhat promises to be a huge mushroom cloud.\u201d The next much larger puff, and its ability to quickly envelop the financial markets, was put on display as the hedge fund Galleon Group went from insider trading charges to complete liquidation in a matter of days. The headlines are already pointing to a potential chain-reaction: \u201cGalleon Wiretaps Rattle Funds as Insider Trading Targeted.\u201d Reports indicate that the Galleon investigation actually began in November 2007, one month after the start of Cycle wave c.<\/p>\n

Back in 2007 when Elliott Wave Financial Forecast<\/em> talked about the \u201cconspicuously tight knit\u201d nature of hedge fund participants, we added that in bear market times, these \u201cmen will turn on each other out of a need to survive.\u201d According to reports, that is exactly what happened. The central witness \u201cwho brought down the hedge fund\u201d suffers from \u201cfinancial woes\u201d and \u201cis working with law enforcement in hopes of receiving a lighter sentence.\u201d The bear market is already squeezing the most aggressive bulls from every angle. New legislative and administrative initiatives are being proposed, and in some cases enacted, that will reduce executive pay at bailed-out financial institutions by up to 90% and attempt to shift the cost of bailouts from taxpayers to other large financial companies. The most far reaching \u201creforms\u201d probably won\u2019t take effect until later, when the decline is over or nearly so.<\/p>\n

Finance led the way down in 2007; so we shouldn\u2019t be surprised by its apparent willingness to do so again. … This time however, the decline will be a third wave at Primary degree, which should be far more intense than the initial Primary-degree decline from October 2007 to March 2009. Stay tuned.<\/p>\n

Get tomorrow’s financial news today!<\/strong> To understand what that means, you must think and act independently from the crowd. Learn how by downloading Elliott Wave International’s FREE 118-page Independent Investor eBook here<\/a><\/strong>.<\/span><\/p>\n

\n

This article was syndicated by Elliott Wave International. EWI is the world’s largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

By Elliott Wave International – In the November 2009 issue of Elliott Wave International’s monthly Elliott Wave Financial Forecast, co-editors Steven Hochberg and Peter Kendall published…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-8790","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/8790","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=8790"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/8790\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=8790"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=8790"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=8790"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}