1. Welcome to SportsJournalists.com, a friendly forum for discussing all things sports and journalism.

    Your voice is missing! You will need to register for a free account to get access to the following site features:
    • Reply to discussions and create your own threads.
    • Access to private conversations with other members.
    • Fewer ads.

    We hope to see you as a part of our community soon!

These guys are THAT good

Discussion in 'Sports and News' started by poindexter, May 11, 2010.

  1. The Big Ragu

    The Big Ragu Moderator Staff Member

    Poin, Repo borrowing levels (or their attempts to mask them) have nothing to do with their trading profits. Repo borrowing levels are a fraction of what they were at the height of the financial crisis. If you are starting from a base level of much lower leverage, but they are also playing games at the end of the quarter to make it look like they are barely leveraged at all (because of the hell they have taken from politicians. ... and frankly what they do is perfectly Kosher according to SEC reporting rules), it doesn't mean they are engaged in unreasonable or risky trading anymore. The banks are not leveraged anywhere near the levels they were 3 and 4 years ago and their prop desks are relatively silent right now compared to the things they were doing a few years ago -- by necessity. A bunch of politicians looking for scapegoats are staring them down.
     
  2. poindexter

    poindexter Well-Known Member

    Of course, Goldman isn't so good at making money for their clients, as they are for themselves.

    http://www.bloomberg.com/apps/news?pid=20601087&sid=aF5tV7uvY0FU&pos=4

    May 19 (Bloomberg) -- Goldman Sachs Group Inc. racked up trading profits for itself every day last quarter. Clients who followed the firm’s investment advice fared far worse.

    Seven of the investment bank’s nine “recommended top trades for 2010” have been money losers for investors who adopted the New York-based firm’s advice, according to data compiled by Bloomberg from a Goldman Sachs research note sent yesterday. Clients who used the tips lost 14 percent buying the Polish zloty versus the Japanese yen, 9.4 percent buying Chinese stocks in Hong Kong and 9.8 percent trading the British pound against the New Zealand dollar.
     
  3. The Big Ragu

    The Big Ragu Moderator Staff Member

    From that story:

    He is being truthful. In the wake of all the scapegoating, Goldman can't win now judging by your posts. Goldman's trading desk has moved away from proprietary trading to being a market-making business.

    Market makers make money from the bid-offer spreads. Those spreads are their payment for keeping the markets liquid--it is a guaranteed profit.

    Their role as a market maker, which accounts for the firm's trading profits, has zero to do with what their analysts are recommending to clients. What they earn on their trading desks and what they charge clients for investment advice relate to two different businesses. Your posts make it seem like they are telling their clients one thing and doing something different with proprietary trades--perhaps they are, but there's no evidence of it and even if they were, it doesn't account for Goldman's profitability. Not to mention that Goldman is being watched like a hawk right now. so it's even more unlikely.

    The reason Goldman has had trading profits is because of its role as a market maker, not because of proprietary trading. What it's equity, fixed income, currency, etc. analysts are recommending to clients isn't guaranteed, the way a bid-offer spread is. It's also beside the point.
     
  4. poindexter

    poindexter Well-Known Member

    I understand what they say they do.

    What I don't understand is why the government subsidizes Goldman Sachs in order for them to create Godzilla-sized bonuses for themselves.

    Explain it to me. Explain to me why Goldman Sachs became a bank holding company in 2008.
     
  5. poindexter

    poindexter Well-Known Member

    Oh, for pete's sake.
     
  6. The Big Ragu

    The Big Ragu Moderator Staff Member

    I never advocated taxing people and subsidizing banks. Why not ask Hank Paulson? He's a former chairman of Goldman, goes through the revolving door and the next thing you know the old boy's network is in play. Or why not ask Tim Geitner? When he was at the NY Fed, he was rubber stamping the payments. As Treasury Secretary to a president trying to use populism to keep public approval, he's now pointing fingers at Goldman. Can you get him to explain his hyena act, while you are at it? Or better yet, ask him (and Obama, who was going to limit lobbyist influence) why former Goldman lobbyist Mark Patterson is Geitner's chief of staff and what role he played in the favors investment banks have gotten, and what the TRUE intentions of the scapegoating act to distract the public are?

    All of that said, it has nothing to do with Goldman's profitability last quarter, which had nothing to do with proprietary trading.

    One thing people don't consider is who Goldman's clients are -- they are big institutional investors, not the people on this message board. They are hedge funds and pension funds and Fortune 500 companies and governments. The Blackstone Group. Ford Motor Company. Various governments. Those entities have investment professionals running their portfolios, and it's not like Goldman puts out a report saying "these are our top picks" and those investment professionals all run out and buy Polish Zlotys vs. Japanese Yen. I know the currency markets, in fact, and they are momentum driven, which means that you can be buying a currency one day and selling it three hours later and still be pursuing the same investment strategy. No one was doing large trades based on a research report saying "Goldman likes the British Pound vs. the New Zealand dollar" and holding it and taking the losses that story was suggests -- as if Goldman's clients get a report that says "top picks" and they buy and hold like lemmings. Those portfolio managers are not just relying on Goldman. They are relying on research from up and down Wall Street and they making calls based on the expertise and biases of the portfolio managers -- a manager who knows equity emerging markets is not suddenly putting everything his pension fund has into exotic currencies because of a research report from Goldman.

    Wall Street analysts are really wrong a lot of the time. They have always been really wrong. It's not news. If they could tell you where to put your money and guarantee returns, then the markets would REALLY be rigged.
     
  7. BTExpress

    BTExpress Well-Known Member

    "The good part is that no matter whether our clients make money, or lose money, Duke & Duke get the commissions.

    Well, what do you think, Valentine?"

    "Sounds to me like you guys are a couple of bookies."

    [​IMG]
     
  8. Fly

    Fly Well-Known Member

    Great now I'm craving a bacon, lettuce and tomato sandwich....with a glass of orange juice (from frozen concentrate).
     
  9. Armchair_QB

    Armchair_QB Well-Known Member

    Wall Street was on AMC last night.
     
  10. BTExpress

    BTExpress Well-Known Member

    Which means it's due to be on again the day after tomorrow.
     
  11. The Big Ragu

    The Big Ragu Moderator Staff Member

    It's Goldman Sach's fault.
     
  12. poindexter

    poindexter Well-Known Member

    One person's view that the whole thing is corrupt

    http://rawstory.com/rs/2010/0630/ratigan-stock-market-obviously-corrupt/
     
Draft saved Draft deleted

Share This Page