It might go down as one of the all time greatest trades of all time. Goldman watched its share price soar 170 per cent since the lows of November, and conducted a rush sale into a bouyant market. Just minutes after the Goldman shares prices, the market got hit by bad retail numbers and the Dow sank 100 points. Now Goldman may be able to ditch the TARP and all its attendant hassles, while its rivals will find it much more expensive–if not impossible–to do the same.
It brings back the old cliche: if the smart guys are selling, should you really be buying?
Others are now wondering if Goldman’s stock sale signals the top of the market, at least for financials. If Goldman believed shares were headed still higher, they would have been wise to take the offering slowly. Instead, they rushed to sell in an almost unprecedented combination of early announcement of good results and overnight pricing of a $5 billion offering.
Lots of market watchers, including Boom Doom & Gloomster Marc Faber, have been saying that the markets would drop in late April. Goldman looks to be adopting this view as well.