The Oracles of Goldman Sachs

Nov 30, 2008 Published under Economics, United States

I have always admired Goldman Sachs as the smartest of the smart, as "the" Investment Banking firm.  When I haven’t gotten a chance to catch up with emails and reports, and I go back and notice "forecasts" and predictions from columnists or analysts, I love taking a look at how accurate they were.

From a report a friend of a friend shared from Goldman’s predictions late this spring/early summer, sent to prospective clients, a small sample:

We expect core inflation to be contained in a range of 2.5-3.0%.

[Instead we are witnessing deflation]

We expect that the Fed will continue easing in 2008 with the Fed Funds rate ultimately settling at 1.25% to 1.75%.

We anticipate 10-Year Treasury yields to range between 3.5-4.0% for 2008.

[We wish]

And the kicker:

Our central case scenarios for 2008 call for operating earnings of $75, respectively, and reported earnings $67. These estimates result in an S&P 500 price target of 1475-1540 for 2008 year end.

They also provided a "Bad case" scenario, where the S&P would end in 2008 at "1200." That was their bad case scenario.  Well, we are still a few weeks away from year-end, but so far it’s tanked far below, at 896 AFTER a nice rally (it hit a low of 752 on Nov 21).  Their "positive case" was S&P 500 hitting 1600.

So much for my thinking at least Goldman knows what’s going on.

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  1. Dan Koifman said:

    Socrates only knew one thing….

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