Goldman Sachs Fools Small Investors Again?

In its note to investors, Goldman Sachs has put special emphasis on the financial sector. For 2018, Goldman was very bullish on one of Warren Buffett’s favorite stocks – Bank of America Corp (NYSE:BAC). According to Goldman analysts, the bank stands to benefit greatly from increasing interest rates thanks to its large book of floating-rate loans and its solid deposit franchise. They also predicted Bank of America Corp (NYSE:BAC) and Wells Fargo & Co (NYSE:WFC) would boost their share repurchase programs by 34% and would increase dividends by approximately 19% citing the banks’ stress tests’ results.

So far Bank of America Corp (NYSE:BAC) has not performed as expected and is currently down by approximately 4% since Goldman issued its updated Conviction Buy list. BofA posted its strongest quarterly profit ever when it issued its earnings report for the 2018 first quarter. The bank hauled in $6.9 billion in profit thanks to lower tax rates, solid economic climate both at home and abroad, and the recent turbulence in the market as investors rushed to execute trades and adjust their positions. Market participants were not particularly happy with the fact that BofA surpassed earnings expectations thanks to cost cutting, rather than stronger lending, and have pushed the stock lower.