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Question for Financial Guys

Discussion in 'Off Topic [BG]' started by 48thStreetCustom, Dec 12, 2018.


  1. 48thStreetCustom

    48thStreetCustom

    Nov 30, 2005
    Colorado
    If Goldman Sachs is "too big to fail" and the government will bail them out if they get in trouble and all they ever get is a slap on the wrist, why not just buy stocks in Goldman Sachs? Seems like you can’t lose.
     
  2. mellowinman

    mellowinman Free Man

    Oct 19, 2011
    Minneapolis
  3. 48thStreetCustom

    48thStreetCustom

    Nov 30, 2005
    Colorado
    I'm not really asking about buying stocks. I'm asking: if the game is rigged, why not bet on the team that benefits from the rigging?
     
  4. Fannie Mae and Freddie Mac were too big to be allowed to fail, and while the government did step in and rescue them (keep them in operation), the terms of the rescue completely wiped out the value of the common stock. Goldman is not as systemically important as Fannie and Freddie; it's more similar to Lehman Brothers. Remember what happened to them?

    Asking how to benefit from an implicit government guarantee is a valid question, but the answer is not as simple as buying a stock.
     
    yodedude2, ErikP.Bass, GregC and 2 others like this.
  5. 48thStreetCustom

    48thStreetCustom

    Nov 30, 2005
    Colorado
    So you're essentially saying: just because they got bailed out last time, there's no guarantee they'll get bailed out next time?
     
  6. Yes, that's the short version. At some point the government / public gets tired of bailouts and decides to make an example of someone.
     
    48thStreetCustom likes this.
  7. 48thStreetCustom

    48thStreetCustom

    Nov 30, 2005
    Colorado
    Ah, okay. Thanks.
     
  8. BassAndReeds

    BassAndReeds

    Oct 7, 2016
    You probably can’t lose. But doesn’t mean you’ll win any bigger than other equivalent stocks.

    All the experts say diversify your portfolio. If these people make 6 figures to give that advice, probably wise to listen.
     
    48thStreetCustom likes this.
  9. Mushroo

    Mushroo Supporting Member

    Apr 2, 2007
    Massachusetts, USA
    Over the past 12 months, GS has underperformed the S&P 500 by about 25%.

    Mushroo's advice is: Don't pick individual stocks! Own the whole market (including GS) in the form of an index fund or target date fund.
     
    OldDog52, 48thStreetCustom and Pacman like this.
  10. GregC

    GregC Johnny and Joe Gold Supporting Member

    Jan 19, 2007
    Chicago
    I don't like to defend Goldman, but by the numbers, they were far from the biggest recipients of the bailout. They got $10 billion--that is of course a lot of money, but Citigroup, JPMorgan and Wells Fargo all got $25 billion and Bank of America got $15 billion. The total paid out in the Capital Purchase Program was $200 billion.
    This. One bailout is no guarantee of future bailouts, nor is it any guarantee of future success.
     
    48thStreetCustom likes this.
  11. Gravedigger Dav

    Gravedigger Dav Supporting Member

    Mar 13, 2014
    Fort Worth, Texas
    This is an absolute truth.
     
  12. Gravedigger Dav

    Gravedigger Dav Supporting Member

    Mar 13, 2014
    Fort Worth, Texas
    Simple answer:
    Send me your money.
    I will occasionally send you a text explaining how much you lost and why.
     
  13. 48thStreetCustom

    48thStreetCustom

    Nov 30, 2005
    Colorado
    I dunnoh man. I see a lot of people here on TB with $5,000-$10,000 basses. They must be doing something right to have that kind of disposable income.
     
    charlie monroe likes this.
  14. They didn’t really dispose of the money.
    They bought a bass:smug:
     
    48thStreetCustom likes this.
  15. two fingers

    two fingers Opinionated blowhard. But not mad about it. Gold Supporting Member

    Feb 7, 2005
    Eastern NC USA
    When you get up to ten Gs it's pretty much the same thing. :D
     
  16. 48thStreetCustom

    48thStreetCustom

    Nov 30, 2005
    Colorado
    You know that old saying, right? "I told my wife, when I die, sell my basses for what they're worth. Not what I told you I paid for them."
     
  17. two fingers

    two fingers Opinionated blowhard. But not mad about it. Gold Supporting Member

    Feb 7, 2005
    Eastern NC USA
    I'll try to skirt the edges if possible. If I cross a line please delete.

    What acceptable to the public one decade might not be the next, and the flip side as well.

    So don't bank on a bailout being acceptable to the public when you are counting on it.
     
  18. MordBass

    MordBass

    Nov 1, 2017
    Midwest
    After my days of working so many random jobs I have come to realize that you never truly know anybodies situation. The amount of times I have seen someone hold an undeserved salary due to weird circumstances.... or you find out that their spouse makes a load of cash so they get to basically blow their checks.... or an inheritance... etc.
    I knew a girl(not very bright) that was dating a guy that seemed rather well off.... come to find out that he was a territory manager for a huge retail company and juiced her into a $120K/year GM spot.
    Or even myself that goes out to eat about once a month and never has more than one beer in a week and i dont smoke and havent had a vacation in about 10 years... you take all that money that im not spending... couple it with the fact that my daily driver is 18 years old and thats how I rocked an american Zon Sonus on stage... while bartending/serving for a living.
    Those high end basses have a resale value like luxury euro suvs. Buy em cheap if youre patient enough.
     
    Oddly and 48thStreetCustom like this.
  19. GregC

    GregC Johnny and Joe Gold Supporting Member

    Jan 19, 2007
    Chicago
    However, it seems like some of them are pushing the financial envelope, because they end up selling them because their roof needs fixing or their car had to go in the shop.
    Just to expand further on my last point: If you had invested in a basket of the five companies above after they got their bailouts, you would have done pretty well. Had you instead invested in a basket of tech-related stocks like Amazon, Apple, Google/Alphabet, Intel, and Microsoft, you would have done a lot better.
     
    Last edited: Dec 12, 2018
    48thStreetCustom and MordBass like this.
  20. Way back when my wife purchased some stock called Apple. At that time I had never heard of it before so I asked her if it was an agricultural company. Still have that same stock today but no super expensive basses.
     
    GregC likes this.

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