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Get On Board With Goldman Sachs

May 14, 2010 By 2 Comments

What company is the happiest in the world for the BP oil spill?  The answer is Goldman Sachs (GS). Since the oil spill in the Gulf of Mexico, the federal government and national media have shifted their attention to the offshore oil drillers. With Transocean (RIG) and BP (BP) in the crosshairs of federal regulators, Goldman’s shares have finally stopped dropping. Shares appear to have found support at $139.

Goldman’s stock was pummeled as the investment bank’s reputation was dragged through the mud. Now there is news that the government is looking at other financial firms as well. Now Morgan Stanley, JPMorgan Chase, UBS, Citigroup, and Deutsche Bank are also being investigated for fraudulent criminal activities. Now may be a good time for investors to look at shares of Goldman. At $144 a share, Goldman trades at 1.2 times book value. It seems like a cheap price to own a fabulous franchise.

Disclosure: I own shares of Goldman Sachs.

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Lies, Lies and More Lies

January 7, 2009 By 2 Comments

First, you have the whole Bernie Madoff scandal with his 50 billion dollar ponzi scheme. Now comes news that Satyam Chairman B. Ramalinga Raju has been cooking the books at Satyam Computer Services Limited (SAY). Ramalinga Raju resigned today after admitting to running a giant accounting fraud.

According to the Wall Street Journal, Satyam Computer Services Ltd. Chairman B. Ramalinga Raju Wednesday resigned after admitting to falsifying company accounts and inflating revenue and profit figures over several years, sending the company’s shares plunging 78%.  Apparently he lied about the company’s earnings, profitability and cash position. He inflated Satyam’s financial position by claiming the firm had over 1 billion dollars in cash and millions in nonexistent assets.

Satyam Computer Services is an Indian information technology company that provides business outsourcing worldwide. Satyam shares have taken a nosedive from $9.35 to .82 after Raju’s announcement. The SEC board of India has halted trading of the stock as it investigates malfeasance.  The irony is that Satyam means truth and telling the truth was by no means standard operating procedure at Satyam. The CEO did countless television interviews while lying about the financial strength of Satyam.

The Bernie Madoff’s, Ramalinga Raju’s and Jeffrey Skillings are becoming far too common place in today’s corporate enviroment. At a time when investors are already lacking confidence in the financial markets, crooks like these only help to further dissipate trust.

Photo by markhillary

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Bernie Madoff’s Giant Ponzi Scheme

December 12, 2008 By 1 Comment

Bernard Madoff, former chairman of the NASDAQ stock market, was arrested yesterday for committing fraud by running a 50 billion dollar ponzi scheme. Major hedge funds and accredited investors had invested billions with Madoff’s firm, Bernard L. Madoff Investment Securities LLC. Madoff claimed to have a complex investment strategy that generated consistently positive returns. This was untrue. Madoff was just running one big ponzi scheme. He was taking money from new investors and using it to pay out money to older investors. Eventually when new money stopped flowing in there was no money to pay investors and the whole scam blew up.

A ponzi scheme is an investment scam that tricks investors out of money by promising extremely high returns. It is a fraudulent way of shifting money around. The scheme is named after Charles Ponzi who was one of the biggest con artists in American history.

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