As chatter about an economic resurgence picked up steam lately, much of Wall Street was envisioning a dreamlike scenario for stocks. After all, in a recent survey a third of portfolio managers recently forecast skyrocketing earnings, with low interest rates remaining low -- the highest percentage ever with such a forecast.
But any investors still harboring such overly rosy outlooks may be in for a rude awakening. And the metaphorical cold water in their faces could well be the formal charges of fraud that the SEC leveled against investment powerhouse Goldman Sachs (GS) this week. Just as some on Wall Street were set to coast once again, the charges are a stark reminder that the consequences of a financial crisis that caused soaring unemployment and ravaged retirement savings are hardly a thing of the past.
Shares of Goldman Sachs got pounded and created a broader market sell-off on Friday, despite the firm's assurances that it would vigorously contest the charges. Even if it stakes out a careful legal argument, though, massive amounts of damage have already been done.
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