Barrons Comments On Goldman's Past Altruism : LUSENET : TimeBomb 2000 (Y2000) : One Thread

Goldman Sachs went public with a small portion of their business yesterday. In advance of the 1929 Crash, Goldman launched the Goldman Sachs Trading Corp. The following was quoted by this week's Barrons as being part of the Senate hearings in 1932.


Senator Couzens: "Did Goldman Sachs organize the Goldman Sachs Trading Corp.?"

Mr. Sachs: "Yes, sir."

Senator Couzens: "And sold its stock to the public?"

Mr. Sachs: "Yes, sir."

Senator Couzens: "At what price?"

Mr. Sachs: "At 104. The stock was split 2-for-1."

Senator Couzens: "And what is the price of the stock now?"

Mr. Sachs: "Approximately 1 3/4 ."

End paste.

Off topic? You tell me.

-- Puddintame (, May 04, 1999


Here is a snip from Cycle Pro with a little more detail:

"This is the not the first Goldman-Sachs IPO in history. In John Kenneth Galbraith's The Great Crash - 1929, (see pages 64 and 65) we read about the organization of the Goldman-Sachs Trading Corporation, which went public on 12/4/28, and about which at a later date Mr. Sachs testified before a committee of the United States Senate that the firm sold 90% of the stock to the public at a price of $104. After the 1929 Wall Street Crash (including a 2:1 stock split), the price of the stock ultimately fell to approximately 1 3/4. The Goldman-Sachs Trading Corporation (GSTC) was an investment trust, a forerunner of the modern mutual fund. According to Galbraith, Goldman-Sachs' stock lost 97% of its going-public value in the 1929 crash, less than a year after its public offering. Deja-Vu perhaps?

If you are interested in the details, here's the poop from the book: Goldman, Sachs, and Company (GS&C) created a new venture called "Goldman, Sachs, Trading Company" (GSTC) and originally issued 1M shares at $100/share on Dec 4, 1928 but GS&C bought it all and then sold 90% of it to the public for $104 [apparently thinking this was a way to make a quick buck -- they had not yet learned about the concept of "leverage" as it is used/abused today]. Only 2 months later (Feb 21, 1929) GSTC merged with a company called Financial & Industrial Securities Corp. -- the resulting assets were $235M. Just before the merger, Feb 2 the stock was $136.50 and 5 days later on Feb 7 it was $222.50 [and all this without a dot-com as part of the name!!]. Later the stock was split 2:1. Following the stock market crash of 1929, a Congressional Hearing was interviewing Mr. Sachs in which he was asked what the current price of the stock was, he replied "...Approximately 1 3/4..."."



-- Ray (, May 04, 1999.

I would be surprised if the connection was direct (that is, THE reason). However, I know FOR A FACT that Goldman is buying their top execs BIG generators in the expectation of, shall we say, problems. But these firms hedge their fears, just as individual investors do.

-- BigDog (, May 04, 1999.

As Infomagic put it, "the higher it goes, the farther it will crash, and the closer it happens to Y2K the worse _both_ will be. "

-- a (a@a.a), May 04, 1999.

A (or anyone),

Please help me out here. Where do I go to read Infomagic's or Milne's comments? Is there a newsgroup or website?


-- Newbie (, May 04, 1999.

Newbie, here is a link to Deja News where Milne participates frequently. You can do a search for his handle and come up with a ton of his posts.

Deja News


-- Ray (, May 04, 1999.

Here's a snip from an article about the Dow hitting 11,000 yesterday: 19990503&qt=11,000&sv=IS&lk=noframes&col=NX&kt=A&ak=news1486

[added bold emphasis mine]


Ironically, the historic move -- which occurred just a few minutes before the closing bell -- came on the same day that billionaire investor Warren Buffett sounded a cautionary note on equity prices, especially high-flying Internet shares.

It also happened just before venerable Wall Street firm Goldman Sachs Group Inc. announced details of its initial public offering that values the investment bank at $29 billion -- the second-largest initial stock offering ever. Goldman's shares will start trading on Tuesday.

Market strategists shied away when asked about the stock market's activity and how it compared to cautionary comments made by Federal Reserve Chairman Alan Greenspan in 1996.

At that time, Greenspan spoke of ``irrational exuberance'' -- when the Dow started that year below half its current level -- and stocks initially skidded before resuming their uptrend.

``Certainly the fundamental underpinnings of the market are still good, so to that extent it is rational, but I don't know about the exuberance,'' said Arun Kumar, senior U.S. equities strategist at Lehman Brothers. His year-end target on the Dow is 11,500.

Even so-called technical analysts -- who make price predictions based on chart patterns, and not on fundamental analysis like earnings and interest rates -- are also bullish.

Ralph Acampora, chief technical analyst at Prudential Securities, said his next target for 1999 is 11,500, at which point he will go back to the drawing board for his next prognosis. But make no mistake, he is bullish.

``What has happened is that we have a whole new team of horses leading this thing now,'' Acampora, one of Wall Street's most influential market watchers, said in a conference call with reporters after the close of trading.

``The leaders at 10,000 are slowly fading what is the market doing? In its infinite wisdom, it's shifting -- it's rotating not liquidating -- into the undervalued ones.

He added, ``It's a new bull market. It's almost hard to believe.''

Copyright 1999 Reuters Limited. All rights reserved.


-- Kevin (, May 04, 1999.

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