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Goldman Sachs was founded in 1869 by Marcus Goldman, and the company has been a notable player in the finance field for over 150 years. The company is headquartered in New York City and serves its customers through four distinct business segments: Investment Banking; Global Markets; Asset Management; as well as Consumer & Wealth Management.
Goldman Sachs serves over 100 countries around the world, and its customers include governments, financial institutions, corporations and high-net-worth individuals. In its early days, Goldman Sachs diversified its services to multiple industries as other financiers solely focused on the railway industry. By 1906, the company managed its first public share offering for United Cigar Manufacturers, which eventually listed on the NYSE.
The success of the offering led to Marcus being invited to sit on the company’s board, kick-starting a Goldman Sachs tradition that is practised to date. In the 1950s, Goldman Sachs co-managed one of the most important share offerings in the US when the Ford Motor Company decided to go public.
The company then accelerated its growth in the 1990s and into the 21st century by expanding internationally. Mergers and acquisitions have always been an important growth strategy for Goldman Sachs, with the most noteworthy deal being the $6 billion purchase of Spear, Leeds, & Kellogg in 2000. Goldman Sachs went public on May 4th, 1999, listing on the NYSE where its stock trades under the ticker symbol GS. The stock is categorised in the Financial Services sector, under the Capital Markets industry.
GS Stock History
GS started with an IPO price of $53, and it quickly gained over 35% on its first day of trading to close at circa $70. Goldman Sachs has never performed any stock split in its history. The early optimism of the stock was curtailed due to the bear market at the turn of the century as well as the uncertainty created by the 9/11 attacks on US soil.
By September 2002, the stock had fallen from highs of circa $125 to trade at around $65. However, the subsequent economic recovery fuelled a multiyear rally that saw the stock print highs of circa $235 by October 2007. The economic collapse of 2008 then triggered a downward spiral to lows of below $60 before the end of that year.
But as economic conditions turned positive, the GS stock started a rally that sent it to a high of circa $275 in March 2018. The stock then retreated from the highs before consolidating again above $200. Goldman Sachs is a regular and stable dividend payer, which bodes well for investors that require consistent income in addition to potential gains in the stock price.
How to Trade GS Stock
As a respected player on Wall Street, the GS stock is always attractive. Here are the factors to consider when trading the stock:
- Legislative and Taxation Issues
With operations all around the world, Goldman Sachs can have its bottom line impacted significantly due to changes in legislative and taxation issues. The financial sector has witnessed increased scrutiny on the regulatory front in the aftermath of the 2008 global financial crisis. For instance, the company has had to align its operations to meet the standards set by UK post-Brexit as well as the revised capital framework in the European Union.
- Economic Conditions and Monetary Policy
Finance stocks, such as GS, take their directional cue from the underlying economic and monetary policy conditions. A strong economic environment will drive the demand of Goldman Sachs services and inspire higher prices of the GS stock; whereas weak economic conditions will likely see the company become more conservative, thus limiting its profits. This will trigger lower GS stock prices. GS stock is very sensitive to monetary policy. Lower interest rates and measures, such as quantitative easing (QE), supply tailwinds to the stock, whereas rate hikes pressure the stock lower.
- Lawsuits and Negative PR
As a long-standing player in Wall Street, Goldman Sachs has seen its brand associated with numerous scandals that have tarnished its image and even attracted lawsuits. The company has dealt with controversies, such as its role in the 2007/8 global financial crisis, insider trading charges, excessive CEO remuneration in comparison to other employees, the use of tax havens, as well as stock market manipulation. Negative headlines usually dampen investor morale on any particular stock, and Goldman Sachs would do well to avoid hitting the wires negatively.
- Periodic Earnings Reports
The Goldman Sachs fiscal year runs from December to November. Quarterly and annual earnings reports are usually tracked by investors who look for evidence on where the company stands in relation to their targets and expectations. Positive reports that exceed investor expectation will usually trigger higher GS stock prices, whereas negative reports that do not meet market expectation will trigger a selloff of the stock.
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