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  9.31 今次高盧人安盛真正仆街喇! 安盛善惡到頭終有報 Hour Glass of AXA Nemesis - In Case AXA Cracks, just like Goldman Sachs (Dec 23, 2018 Nov 23, 2018收市最新報導,今年未完,已經Crack掉17.51%,距離作者所說的「仆街線20%」近矣)。睇怕小鳳姐又要再次準備出場,唱番支佢嘅首本名曲“齊歡呼,來慶賀”囉!本人專業評語是: “呢隻AXA爛股可以扔掉落屎坑,唔使恨!
 
  2018-11-15
 

 

      

Goldman Sachs Cracks

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10 comments
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 About: Goldman Sachs Group Inc. (GS)

Summary

Last month, I wrote about the reputational risk posed to Goldman Sachs by the 1MDB scandal, and presented two hedges for the stock.

Since then, the stock has dropped 22%.

Here, I show how the hedges have ameliorated the stock's decline and briefly discuss courses of action for hedged longs now.

Looking for more? I update all of my investing ideas and strategies to members of Bulletproof Investing. Get started today »

Bloomberg discusses Goldman SachsBloomberg's Ramy Inocencio and Shery Ahn discussing Goldman's fall last month.

Hey Lloyd I'm ready to be heartbroken'

Cause I can't see farther than my own nose at the moment

- From "Lloyd, I'm Ready To Be Heartbroken" by Camera Obscura

Goldman Sachs Cracks

Last month (In Case Goldman Sachs Cracks), I wrote that Goldman Sachs (GS) was risking its most valuable asset with its latest scandal, which appeared to implicate its chairman, Lloyd Blankfein:

According to the business principles Goldman Sachs (GS) claims to run itself by, the company's reputation is a crucial asset:

OUR ASSETS ARE OUR PEOPLE, CAPITAL AND REPUTATION.

If any of these is ever diminished, the last is the most difficult to restore. We are dedicated to complying fully with the letter and spirit of the laws, rules and ethical principles that govern us. Our continued success depends upon unswerving adherence to this standard.

Goldman shares dropped the most in seven years on Monday, as the bank's reputation is on the line in the wake of the unsealed guilty plea by its former Southeast Asia chief, Tim Leissner, in the Malaysian 1MBD sovereign wealth fund scandal. In his guilty plea, quoted in the Singapore Straits Times article linked to above, Leissner claimed,

I conspired with other employees and agents of Goldman Sachs very much in line of its culture of Goldman Sachs to conceal facts from certain compliance and legal employees of Goldman Sachs.

I knew that concealing Jho Low's involvement as an intermediary was contrary to Goldman Sachs's stated internal policies and procedures," he said. "I and several other employees of Goldman Sachs at the time also concealed that we knew that Jho Low was promising and paying bribes and kickbacks to foreign officials to obtain and retain 1MDB business for Goldman Sachs, for the benefit of Goldman Sachs and myself.

Over the weekend, as I noted on Twitter below, the Financial Times reported that former Goldman Sachs CEO Lloyd Blankfein was present at a meeting between Goldman bankers and Jho Low, the Malaysian official who's been charged in the 1MBD scandal.

Now, Malaysia's "leader-in-waiting" Anwar Ibrahim is demanding Goldman refund the country the $600 million in fees it collected related to 1MBD.

 

I went on to present two hedges for Goldman Sachs longs concerned about downside risk. Since then, the stock has dropped 22.1%.

ChartGS Total Return Price data by YCharts

Let's see how those November hedges have ameliorated Goldman's drop since and talk briefly about what hedged Goldman longs can do now. First, though, a quick reminder about the purpose of hedging: You hedge when you are bullish about a security (otherwise you wouldn't own it) but want to limit your risk in the event you were wrong. Goldman longs who hedged in November didn't expect the stock to drop significantly but wanted to protect themselves in case it did.

The November Optimal Put Hedge

On Nov. 12, these were the optimal, or least expensive, puts to hedge GS against a greater-than-20% drop by late June (optimal hedge screen captures via the Portfolio Armor iPhone app).

Optimal put hedge on Goldman Sachs via Portfolio Armor

Note that the cost here was $1,800, or 2.91% of position value (calculated conservatively, using the ask price of the puts).

Let's look at how that hedge has reacted to the ~22% drop.

How The Optimal Put Hedge Has Reacted

Here's an updated quote on those puts as of Friday's close:

 

Screen capture via the CBOE.

How That Hedge Ameliorated Goldman's Drop

GS closed at $206.05 on Nov. 12. A shareholder who owned 300 shares of it and hedged with the puts above then had $61,950 in GS shares plus $1,800 in puts, so the net position value was $61,950 + $1,800 = $63,750.

The stock closed at $160.05 on Friday, Dec. 21, down 22.1% from its close on Nov. 12. The investors' shares were worth $48,015 on Friday, and the put options were worth $7,087.50, using the midpoint of the spread. So, the net position value as of Friday's close was $48,015 + $7,087.50 = $55,102.50. $55,102.50 represents a 13.6% drop from $63,750.

The November Optimal Collar Hedge

On Nov. 12, this was the optimal collar to protect against a >20% drop in GS by late June, while not capping your possible upside at less than 14% by then.

Optimal collar hedge for GS via Portfolio Armor.

In this case, the net cost of the hedge was negative, meaning you would have collected a $90 net credit, assuming, conservatively, that you bought the puts and sold the calls at the worst ends of their respective spreads.

How That Optimal Collar Hedge Has Reacted

Here's an update quote on the put leg of the collar (note that it's at a different strike than the first hedge):

Screen capture via the CBOE.

And here's an updated quote on the call leg:

 

Screen capture via the CBOE.

How That Hedge Ameliorated Goldman's Drop

Recall that GS closed $206.05 on Nov. 12. A shareholder who owned 300 shares of it and hedged with the collar above then had $61,950 in GS shares plus $1,575 in puts, and if the investor wanted to buy to close the short call position, it would have cost him $1,665. So, his net position value on Nov. 12 was ($61,950 + $1,575) - $1,665 = $61,860.

On Friday, the shares were worth $48,015, the put options were worth $6,285, and it would have cost $169.50 to buy to close his calls, using the midpoint of the spread in both cases. So ($48,014 + $6,285) - $169.50 = $54,129.50. $54,129.50 represents a 12.5% drop from $61,860.

More Protection Than Promised In Both Cases

GS dropped by 22.1% from Nov. 12 to Dec. 21. Both hedges were designed to protect against a >20% drop, and they limited drawdowns to 13.6% and 12.1%, respectively.

What Now?

Earlier this month, Brian Gilmartin pointed out that Goldman was trading below tangible book value. In that article, he also noted that "some technicians" considered the share price range of $160 to $170 to be a good entry point. You might want to read Gilmartin's article before deciding what to do next. The nice thing about being hedged, though, is that it gives you options (no pun intended). You don't have to worry so much about how much further GS shares might drop (you're not going to be down more than 20% with these hedges). If you're bearish on GS now, you can exit for a smaller loss. If you're bullish and think this is a bottom, you can sell your appreciated puts and buy more Goldman shares. In any case, you have breathing space to let the dust settle and decide on your best course of action without the anxiety of an unhedged investor.

To be transparent and accountable, I post a performance update for my Bulletproof Investing service every week. Here's the latest one: Performance Update - Week 55.

 

Nov 24, 2018 closing 

  9.31 今次高盧人安盛真正仆街喇! 安盛善惡到頭終有報 Hour Glass of AXA Nemesis - In Case AXA Cracks, just like Goldman Sachs (Nov 23, 2018收市最新報導,今年未完,已經Crack掉17.51%,距離作者所說的「仆街線20%近矣)。睇怕小鳳姐又要再次準備出場,唱番支佢嘅首本名曲“齊歡呼,來慶賀”囉!本人專業評語是: “呢隻AXA爛股可以扔掉落屎坑,唔使恨!”P.        

 

 

 

 

In Case Goldman Sachs, and so is AXA, according to hkonline.com.hk, Cracks

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15 comments
|
 About: Goldman Sachs Group Inc. (GS)

 

 

 

  Summary

Shares of Goldman Sachs dropped the most in seven years on Monday, after the newly released guilty plea of its former South East Asia head in the 1MBD scandal.

The Financial Times reported over the weekend that Goldman's former CEO Lloyd Blankfein may have been in the room during meetings with the Malaysian official charged in the scandal.

In light of the risk related to this, I present two ways Goldman shareholders who want to stay long can limit their risk.

Looking for more? I update all of my investing ideas and strategies to members of Bulletproof Investing. Get started today »

Bloomberg discusses Goldman Sachs

Bloomberg's Ramy Inocencio and Shery Ahn discuss Goldman's fall.

  

Goldman, and so is AXA, according to Frank of hkonline.com.hk, Risks Its Most Valuable Asset

According to the business principles Goldman Sachs (GS) claims to run itself by, the company's reputation is a crucial asset:

OUR ASSETS ARE OUR PEOPLE, CAPITAL AND REPUTATION.

If any of these is ever diminished, the last is the most difficult to restore. We are dedicated to complying fully with the letter and spirit of the laws, rules and ethical principles that govern us. Our continued success depends upon unswerving adherence to this standard.

Goldman shares dropped the most in seven years on Monday, as the bank's reputation is on the line in the wake of the unsealed guilty plea by its former South East Asia chief, Tim Leissner, in the Malaysian 1MBD sovereign wealth fund scandal. In his guilty plea, quoted in the Singapore Straits Times article linked to above, Leissner claimed,

 I conspired with other employees and agents of Goldman Sachs very much in line of its culture of Goldman Sachs to conceal facts from certain compliance and legal employees of Goldman Sachs.

I knew that concealing Jho Low's involvement as an intermediary was contrary to Goldman Sachs's stated internal policies and procedures," he said. "I and several other employees of Goldman Sachs at the time also concealed that we knew that Jho Low was promising and paying bribes and kickbacks to foreign officials to obtain and retain 1MDB business for Goldman Sachs, for the benefit of Goldman Sachs and myself.

Over the weekend, as I noted on Twitter below, the Financial Times reported that former Goldman Sachs CEO Lloyd Blankfein was present at a meeting between Goldman bankers and Jho Low, the Malaysian official who's been charged in the 1MBD scandal. 

 

Now, Malaysia's "leader-in-waiting" Anwar Ibrahim is demanding Goldman refund the country the $600 million in fees it collected related to 1MBD. If you currently own shares of Goldman Sachs and intend to stay long, but want to limit your downside risk over the next several months, in light of the current scandal, I have presented a couple of ways you can do so below.

Adding Downside Protection To Goldman Sachs

For these examples, I'll assume you have 300 shares of Goldman and can tolerate an 18% decline over the next several months, but not one larger than that. The screen captures for these two hedges come from the Portfolio Armor iPhone app.

Uncapped Upside, Positive Cost

As of Monday's close, these were the optimal, or least expensive, put options to hedge 300 shares of GS against a >18% drop by late June.

Optimal put hedge on Goldman Sachs via Portfolio Armor

The cost of this protection was $1,800, or 2.91% of position value. That cost was calculated conservatively, using the ask price of the puts. In practice, you can often buy and sell options at some price between the bid and ask.

Capped Upside, Negative Cost

If you were willing to cap your possible upside at 14% over the same time frame, you could have used the optimal collar below to get the same level of downside protection as the first hedge.

Optimal collar hedge for GS via Portfolio Armor.There were a couple of differences with this hedge. The first is that, after an iterative process taking into account the net cost of the collar, the hedging algorithm was able to use a less expensive strike for the put leg, one where the cost was $1,575, or 2.55% of position value. The second difference is that the income from selling the call leg - $1,665, or 2.69% of position value, calculated conservatively, at the bid - more than offset the cost of the put leg.

 

So the net cost of this hedge was negative, meaning you would have collected a net credit of $90 when opening it, assuming you placed both trades at the worst ends of their respective spreads.

Wrapping Up

It's impossible to predict with certainty the risk to Goldman Sachs from the current scandal. Goldman has survived previous scandals, such as the one surrounding its actions during the financial crisis. Nevertheless, the prospect of a former Goldman CEO being implicated in the current 1MBD scandal might elevate its impact beyond that of previous scandals. If you plan to stay long in the face of that risk, one of the hedges shown above might be worth considering.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

drwealthzone 驪山四顧,阿房一炬,當時奢侈在何處

高盛股價可因Kleptocracy及Money Laundering違規違法罪行驟崩兩成。同樣道理,高盧人安盛犯了同樣更大更多更猖狂同類罪行,股價一樣可以輕易崩跌20%以上。本人於投行任職交易員時,擅長對沖技巧以減少類似黑天鵝式風險,各位可聯絡討論

Nov 24, 2018

話口未完,依家唔係“In Case”AXA Cracks,而係Crack緊,「AXA Nemesis安盛報應」已經出現,無可挽救。今年到依家已經跌掉13.48%。仲有個半月2018年先至完,睇怕凶多吉少囉!要做對沖,都係講緊對沖再之後的另外 -20% 喇!

  9.31 今次高盧人安盛真正仆街喇! 安盛善惡到頭終有報 Hour Glass of AXA Nemesis - In Case AXA Cracks, just like Goldman Sachs (Nov 23, 2018收市最新報導,今年未完,已經Crack掉17.51%,距離作者所說的「仆街線20%近矣)。睇怕小鳳姐又要再次準備出場,唱番支佢嘅首本名曲“齊歡呼,來慶賀”囉!本人專業評語是: “呢隻AXA爛股可以扔掉落屎坑,唔使恨!”P.     


 

 

 

 

 
 
 
高盧人安盛公司仆咗街,我哋咪個個變咗仆街仔、仆街女、仆街師奶、仆街麻甩佬?

留言: 其中一眾仆街代理群   2018-11-24 06:23:31 回覆

我同我老公傾過,都係覺得好唔對路,依家同AIA友邦傾緊過檔,好快成事。

留言: 高盧人安盛代理代表發心聲   2018-11-24 05:57:01 回覆

睇怕高盧人安盛下個好交易日隨時就會仆街,即係到達(-20%)公認仆街線。我就同宏利斟緊。

留言: 高盧人安盛後勤部代表一致心聲   2018-11-24 05:54:29 回覆

“齊歡呼,來慶賀” 高盧人安盛仆街喇!

留言: Macau Jackie 代表澳門區代理共同心聲   2018-11-24 05:46:42 回覆

今次高盧人安盛真正仆街喇!

留言: 高盧人安盛代理代表發心聲   2018-11-24 05:45:42 回覆

高盧人安盛開始仆街喇!

留言: Uncle 6   2018-11-18 18:07:56 回覆

Jesus Christ....

留言: Tony   2018-11-17 09:30:25 回覆

My goodness...

留言: Jimmy Chang   2018-11-15 12:26:01 回覆

Go hedging...just to play safe...

留言: 安盛十二釵 排名第一 花之魁Barbara Siu   2018-11-15 10:28:52 回覆

I need hedging. AXA stock price may most probably going down sharply.

留言: 安盛十二釵 排名第三 美艷親王Angela Wu    2018-11-15 09:38:14 回覆

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