ebook essays pieces of the puzzle
Friday, May 20th, 2011
another test

The third ever pix was the goldman rorschach test:  “With the all-time high and all-time low in GS occurring within thirteen months of each other (and in the not-too-distant past), the Goldman chart is also something of a Rorschach test.”

Since that posting (in time marked by the vertical line above), the stock is virtually unchanged in price.  The regulatory and public relations battles continue apace, but the ultimate question is whether the golden dollar machine will purr like it has in the past.  The lower panel shows that relative to the broader market, Goldman has underperformed, as have financials in general.

Now it’s another Rorschach test.  Is this a buying opportunity, or the start of an unwinding of the finance infrastructure that grew so large over the last thirty years?  Whither the industry and its leading light?  (Chart:  Bloomberg terminal.)