Tuesday, July 20, 2010

Cranky Barry Ritholtz

Sure, Barry Ritholtz is cranky about the palaver of the unthinking about the Goldman Sachs case.

Oh, by the way, he's right.

The case did turn out to be a slam-dunk, otherwise the settlement would never have occurred so quickly, and for such a large amount.

The fact that the fine is a fraction of GS earnings is completely irrelevant as Barry points out.

The outflow of the case is now such that the initial beat-down on the stock from ~$180 to ~$130/share was perhaps due in part to the compelling case that Barry made. While I don't recall Barry mentioning any potential fine or settlement figures, now that those figures are known, and assuming that civil liability is held to under 10x that amount, suggests that the beat-down on the price was just about right.

Industrial strength caution: That assumes, of course, that the same unthinking commentators are right about that 10x being the maximum figure.

No matter what, if you thought about it for even 5 minutes, you'd realize that a case of "malfeasance-corporate-lite" isn't all that shocking today, nor was it really likely to damage Goldies franchise by much. After all, making money with an occasional touch of dodgy behaviour isn't like withdrawing from the "Bank of Fidelity" in marriage; money flows where money grows. And Goldie remains a powerful money tree.

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