The Five Dumbest Things on Wall Street This Week: Oct. 26

3. Goldman's Conviction

What's the difference between a "buy" and a "conviction buy" at Goldman Sachs?

Well, as far as we can tell from its maneuvers in Monster Beverage Corp. (MNST) this week, it literally is "conviction" in both senses of the word.

Bear with us.

Shares of the beverage maker, which sells super-caffeinated drinks such as Java Monster, Monster Rehab, and X-Presso Monster, sank 10.5% to $41 Tuesday, after Goldman analyst Judy Hong yanked the company from its high-profile conviction buy list. Hong made the move after the Food and Drug Administration announced Monday that it was investigating reports of five deaths linked to the company's drinks.

Monster is also being sued by the family of a 14-year-old Maryland girl with a heart condition who tragically died after drinking two cans of Monster in a single day. For those unfamiliar with Monster's eponymous energy drink, it comes in 24-ounce cans and contains 240 milligrams of caffeine, or about seven times the amount of the caffeine in a 12-ounce can of regular Coke. (Oh man! We get a headache just thinking about it.)

Not that Hong's conviction has helped the shares that much. Since she added it to the conviction list on January 16, Monster's stock had fallen 5.7% vs. an 11.2% surge in the S&P 500.

"While the FDA has yet to establish a causal link between these deaths and the drink, we believe MNST shares could be range-bound in the near term," analyst Judy Hong wrote in the note. She did, however, maintain a "buy" rating on the stock, saying that following Monster's massive selloff, regulatory and legal risks are already baked into the stock's price.

As to the difference between a "buy" and a "conviction buy," we guess it has something to do with emphasis, but to be honest it seems purely semantic to us.

For that matter, the Monster downgrade, if that's what it was, seems to be a matter of semantics as well. According to Hong's logic, if the Maryland girl's family fails to get a conviction in its case against the company, then Hong will get her conviction back in the stock.

You know what? Simply thinking about that notion gives us an even bigger headache.

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