Investing is a game of expectations, not a game of results. Where else would a business that just saw its bottom line cut in half receive such a warm embrace than in the wacky, upside world best known as Wall Street?
This morning Goldman Sachs (GS) reported fourth quarter diluted earnings of $1.84 per share. That's down 56% from a year ago but roughly 50% above what analysts were expecting on average. Thus the stock is trading sharply higher today.
Just like its banking peer JP Morgan (JPM) that already reported results, Goldman also delivered a topline miss, with a 30% decline in revenues to $6.05 billion --about 5% short of expectations. Citigroup (C) results missed on both profit and revenue.
Goldman shares are down rougly 40% from a year ago, but have gained over 15% in the past four-weeks, and are back above $100 a share again. In short, whether it is Goldman or the entire Financial Sector (XLF) that you are taking about, last year's losers have suddenly become this year's winners.Read More »from Financial Stocks: Time to Buy or Cash Out and Run?