Goldman Lawsuit Wrecks the Market … in one day.

The stock market has enjoyed 10 consecutive weeks of consistent upward movement and in one day the US Government lawsuit against Goldman Saks plays havoc on the markets.  The S&P 500 drops 1.6% in one day on April 16th.  The lawsuit stems from Goldman creating an investment product of Collateral Debt Obligations (CDO’s).  What is a CDO?  Having read many articles in the Wall Street Journal, it is still difficult to understand what a CDO is and how it works.  Yet many people invested in them and lost money.  The government files suit because these investors lost millions of dollars in this deal and one investment firm sold the investment short and made millions.

What is the lesson learned from this?  Don’t invest in anything that you do not understand.  If you are investing in an investment product, insurance product, hedge fund, etc., before you agree to put your money into it, make sure that you understand what you are investing in and how it makes money.  If you do not understand it, stay away.

Contact Richard Taylor for your investment planning needs or for additional information.

 

PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS.  Investing in stocks, bonds, mutual funds and other investments involves risk, and may decline in value and are not insured by the FDIC or any other Federal government agency.

Contact Us!

Contact Us