October 18, 2011
Pendulum Swing in the Market
At the end of the second quarter, Goldman Sachs reported a $1.85 per share earnings and Bank of America reported a per share decrease of $.99 after an $8.8 billion loss. Today, the tables have turned with the third quarter filings. Goldman Sachs is reporting a $.85 per share loss after a $428 million loss and Bank of America is reporting a $.56 per share gain after a $6.8 billion profit. The Bank of America turn around may be short lived, however, as the boost in earnings is due, in part, to certain asset sales boosting cash and "one-time accounting adjustments." Bank of America also remains exposed to investment risks ($485 million) in Greece. Goldman Sachs, on the other hand, attributes the deflated earnings to a bad investment in the Industrial and Commercial Bank of China that resulted in a $1 billion loss and low returns in other equities.
The switch in positions and the underlying reasons highlight the volatility that remains in the financial markets.