Goldman Sachs/Morningstar recommendations

StewyD32

StewyD32

Well-Known Member
Silver Stacker
As Im new to Commsec have been looking around the site and getting used to what is available. Its a pretty good site.
There are recommendations from Goldman Sachs and Morningstar for companies when I start looking deeper at what I am interested in.

Are these recommendations worth listening too?

For example I am currently looking at TPG Telecom (TPM), and both Goldman Sach and Morningstar suggest strong buys and it is currently undervalued.
 
I worked at GS for many years. Their research analysts are well regarded, but they write mostly for large institutional clients (super funds, insurance companies etc) who invest with different goals and timeframes. Ie. they're looking for quarterly gains to outperform their competitors on the league tables.

So the recommendations may not be suitable for a small retail investor. But the analysis is generally good, and it gives you all the financials, so is a good place to start.
 
"Are these recommendations worth listening too?"
Click to expand...
No
The rest is not worth reading.

Trying not to be glib but I have come to believe the phrase, "You get what you pay for" applies.

After they get their paying clients set they might publicise a 'buy' rating. After they sell they might publicise a sell rating. If they want to create a cushion of buying interest under the stock so they can exit easily when they choose I believe they are quite capable of continuing to publicise a 'buy' well after there is anything in it for the buyer.

I do look at profit projections by morningstar and brokers at comsec, but give it little weight. The most important facts are under the 'financials' tab in 'quotes and research'
-> company historicals
-> balance sheet

There is a well known Australian blogger, commentator and fund manager who has been feverishly enthusiastic lately about quality mid/small cap companies that have been thrown overboard by the 'institutions' as they 'rotated' their funds towards blue chips. Needless to say, his funds hold the former. Every time I acted in response to this guy's public stance, whether positive or negative, I lost money.

Similarly the sub-forum guru on a particular stock or investment theme can be your worst enemy out of all the people commenting. If you take their technical expertise to heart and believe their apparent conviction and good faith you might end up a meal for them. You'll end up never wanting to see a smile again, unless its from a child or a dog.

Try a newsletter or two. Pay for it. The newsletter tipster has a reputation to cultivate and protect and can only do so by tipping you good investments. Dont go for the speculative tipsters early in your trading - you will get screwed royally in the end. Go for companies with a history of profit and dividends that currently look well priced. Be patient or be poor.

I could go on, but you've got all you deserve as you've never harmed me.
 
finicky said:
Try a newsletter or two. Pay for it. The newsletter tipster has a reputation to cultivate and protect and can only do so by tipping you good investments.
Click to expand...

And that's no guarantee of getting good advice either. :/

I truly think as finicky said you've got to get a grip on
-> company historicals
-> balance sheet.

I was subscribed to a particular stock market advice mob for a year, cost me in the vicinity of a grand, did it to see if i could learn anything from them. Gave them the flick because I felt their choices were somewhat peculiar eg they kept plugging ANZ on the basis that it was building it's exposure to the Asian market - that just read alarm bells for me, and WOW, can't remember what their line of thought was but it was just prior to the long drawn out decline of Masters.

I haven't got a grip on -> company historicals -> balance sheet etc yet, so I'm out of the stock market. Except for my exposure through Acorns.
 
mmm....shiney! said:
finicky said:
Try a newsletter or two. Pay for it. The newsletter tipster has a reputation to cultivate and protect and can only do so by tipping you good investments.
Click to expand...

And that's no guarantee of getting good advice either. :/

I truly think as finicky said you've got to get a grip on
-> company historicals
-> balance sheet.
Click to expand...

Add to that, get a handle on the business, if you don't understand what they do, and how they make money, it's possibly not the business for you.

Also, I always research the management. Are they owners, do they have a history of delivering, have they been involved in any historical "challenges"

Overall I have a checklist of about 20 elements I investigate before initiating a buy.
 
Another great post from finicky.

I'm a contrarian by nature so I am more likely to do the opposite of what these guys recommend. My thinking is generally the big sharks feed themselves first and then by the time you read about it in the paper it is old news and you're intended to be the food. Its a bit of an exercise in finding the Greater Fool.
 
Follow Goldman Sachs at your own peril...Where were they in 2007/08? History will repeat!

Regards Errol 43
 
Hypothetical scenario:

They have a large amount of shares lets say in company "X" that they want to get rid of in the near future. They talk up the price of it by recommending it out to pension funds, individuals... as strong buy and that its undervalued when in fact in reality they see it as bad value or neutral. This allows them to sell their large amount of shares at a good price. Then rinse repeat.

Isnt there a high probability they are doing something like this?
 
errol43 said:
Follow Goldman Sachs at your own peril...Where were they in 2007/08? History will repeat!

Regards Errol 43
Click to expand...

GS didn't get bailout. They got it from AIG as payment for holding subprime.
In any case that is splitting hairs, it's like calling people who get middle income welfare payments as dole bludgers.
It would have been remiss if they didn't take tje $10billion cheque, lol who wouldn't.

GS did better than their peers from GFC.
 
Argentum said:
Hypothetical scenario:

They have a large amount of shares lets say in company "X" that they want to get rid of in the near future. They talk up the price of it by recommending it out to pension funds, individuals... as strong buy and that its undervalued when in fact in reality they see it as bad value or neutral. This allows them to sell their large amount of shares at a good price. Then rinse repeat.

Isnt there a high probability they are doing something like this?
Click to expand...

Very unlikely, if they caught on a share price turn they would be bankrupt.
That's what pumper do.

Plus vast majority of their income comes from turnover and they take commission whether it goes up or down.

a movie theatre makes money in a similar way

1 They aquire rights to movies to attract patrons
2 They upgrade theatre ie gold glass to attract more patrons.
3 They sell popcorn and drinks to patrons

2 and 3 might be lucrative but it is tirnover that they make most of the money from.

Majority of shares held by these companies belong to someone else.

Also investments banks and trading houses hold a pool of shares, just like western union or moneygram would of each currency they buy and sell so they don't have to pay a fee to a third party for each buy and sell.

Not saying bad/naughty/criminal events don't occur look at HSBC they supported ISIS and Mexican cartel with laundering money for them knowing full well it is illegal.
 
finicky said:
"Are these recommendations worth listening too?"
Click to expand...
No
The rest is not worth reading.

Trying not to be glib but I have come to believe the phrase, "You get what you pay for" applies.

After they get their paying clients set they might publicise a 'buy' rating. After they sell they might publicise a sell rating. If they want to create a cushion of buying interest under the stock so they can exit easily when they choose I believe they are quite capable of continuing to publicise a 'buy' well after there is anything in it for the buyer.

I do look at profit projections by morningstar and brokers at comsec, but give it little weight. The most important facts are under the 'financials' tab in 'quotes and research'
-> company historicals
-> balance sheet

There is a well known Australian blogger, commentator and fund manager who has been feverishly enthusiastic lately about quality mid/small cap companies that have been thrown overboard by the 'institutions' as they 'rotated' their funds towards blue chips. Needless to say, his funds hold the former. Every time I acted in response to this guy's public stance, whether positive or negative, I lost money.

Similarly the sub-forum guru on a particular stock or investment theme can be your worst enemy out of all the people commenting. If you take their technical expertise to heart and believe their apparent conviction and good faith you might end up a meal for them. You'll end up never wanting to see a smile again, unless its from a child or a dog.

Try a newsletter or two. Pay for it. The newsletter tipster has a reputation to cultivate and protect and can only do so by tipping you good investments. Dont go for the speculative tipsters early in your trading - you will get screwed royally in the end. Go for companies with a history of profit and dividends that currently look well priced. Be patient or be poor.

I could go on, but you've got all you deserve as you've never harmed me.
Click to expand...

Thanks for the advise finicky. I do look at the facts and and company health.
I do have a lot to learning in stocks but I am cautious before buying and look at all available data relating to the companies in question.

I did find myself between two companies roughly the same in the same sector but GS and Morningstar had a recommendation on one compared to the other so was wondering if that would be a cause to sway a little more to it.
Anyway I have me answer now.
What newsletters are worth paying for?
 
Ok. I have narrowed my choice down to:

Lycopodium (LYL)
Norther Start (NST)

NST has a better entry point at the moment compared to LYL. Any recommendations between the two?
 
Don't know much about LYL, but IMHO NST is a great company. One of my favourite gold stocks (even though I'm not currently holding)

You're going to get a biased response to that question here though since this is a precious metals forum I'd expect many posting on this site would lean toward NST.
 
In my opinion stay away from resource stocks (including gold stocks). If you are not a geologist or mining engineer, etc you will not understand the enough about ore grades and the accuracy thereof, estimated deposit sizes, estimated cost of mining/production, projected exploration costs, etc. Most mining companies are very wrong in their estimates/projections of many of these important variables and end up doing worse then they thought they would do. If you do not have the technical expertise (most broking analysts do not either) to understand these variables in detail do not invest. These factors are on top of commodity price risk and currency risk, both of which you cannot control.
 
Ok, I shouldn't but I will. I have been buying NST and I haven't been buying LYL.

A buy at today's closing price is almost exactly my average buy price from maybe 6 months of accumulation.
I'm not able to call the current chart so I have no opinion as to whether the price is bouncing amidst a downtrend which is unfinished or beginning a significant rally.

It's your call as to whether we're stlll in a gold bull market. If you think we are, then NST as as good as it gets for a gold mining company. Just have a look at the return on shareholders equity (ROE) over 5 years, the improving equity (book value), the cash on the balance sheet, the zero debt. Check out their presentations that show that they are more than replacing the ozs that they mine from drilling in and near their mines. That's cheap gold reserve additions compared to acquisitions of other companies or greenfield exploration.

Bargain Hunter's points are true and you might like to check out his beloved Credit Corp (CCP) for balance - good company. Some of us take the big dipper, some the scenic railway, careful to inspect the gap before boarding, cup of tea and a nap afterwards :P
 
BuggedOut said:
Don't know much about LYL, but IMHO NST is a great company. One of my favourite gold stocks (even though I'm not currently holding)

You're going to get a biased response to that question here though since this is a precious metals forum I'd expect many posting on this site would lean toward NST.
Click to expand...

I think when it comes to stocks and a having wide spread on a portfolio where won't be a bias for gold stocks. just more of a leaning towards it :)
And yes I have researched a lot of companies recently and NST is one up at the top.

Bargain Hunter said:
In my opinion stay away from resource stocks (including gold stocks). If you are not a geologist or mining engineer, etc you will not understand the enough about ore grades and the accuracy thereof, estimated deposit sizes, estimated cost of mining/production, projected exploration costs, etc. Most mining companies are very wrong in their estimates/projections of many of these important variables and end up doing worse then they thought they would do. If you do not have the technical expertise (most broking analysts do not either) to understand these variables in detail do not invest. These factors are on top of commodity price risk and currency risk, both of which you cannot control.
Click to expand...

Thanks for the comment back. I found NST had more grounding compared of a lot intact most companies i have researched, and this is across many sectors.

finicky said:
Ok, I shouldn't but I will. I have been buying NST and I haven't been buying LYL.
A buy at today's closing price is almost exactly my average buy price from maybe 6 months of accumulation.
I'm not able to call the current chart so I have no opinion as to whether the price is bouncing amidst a downtrend which is unfinished or beginning a significant rally.
It's your call as to whether we're stlll in a gold bull market. If you think we are, then NST as as good as it gets for a gold mining company. Just have a look at the return on shareholders equity (ROE) over 5 years, the improving equity (book value), the cash on the balance sheet, the zero debt. Check out their presentations that show that they are more than replacing the ozs that they mine from drilling in and near their mines. That's cheap gold reserve additions compared to acquisitions of other companies or greenfield exploration.

Bargain Hunter's points are true and you might like to check out his beloved Credit Corp (CCP) for balance - good company. Some of us take the big dipper, some the scenic railway, careful to inspect the gap before boarding, cup of tea and a nap afterwards :P
Click to expand...

Thanks for sharing that. I have made a small purchase with NST this morning and hope to do incremental purchases when it permits.
 
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