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The Golden Child

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Goldman still best in breed.

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They say the first step in solving a problem is admitting that you have one.

Back in October, when "write-down fever" was sweeping the Street, the good folks at Goldman Sachs (GS) offered words of assurance that the company wouldn't get caught up in the murky muck. Given it had deftly maneuvered the first wave of sub-prime fallout, few folks on the Street doubted the moxie.

It was reminiscent of the blind ambition in Blackstone (BX) following its initial public offering. It's hard to argue with success and there was no denying that Goldman was the best shop on the Street.

Eight months later, despite continued insistence that it's insulated from write-down risk, the contagion has caught up with Goldman. The stock, once the rock star in the financial universe, is off 35% and in the crosshairs of the short-side community.

As the market is a leading indicator, the latest round of rumors may be late to the party. While the financials continue to encapsulate a finance-based, credit-dependent machination tied together with $500 trillion of derivatives, the onus is on us to synch the time horizon and risk profile of our positions.

With a conscious nod that technical analysis is a better context than catalyst, I'm watching GS $160 as the level of lore. The financials are oversold and, with all due respect to Jamie Dimon and JP Morgan (JPM), Goldman continues to be best in breed.


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Enter positions in Goldman at your own risk and remember that sometimes the ability not to trade is as important as trading ability.

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