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Another View At Goldman's Trading Perfection And Statistical Improbabilities

Tyler Durden's picture




 

When a firm's trading performance challenges not only all preconceptions of realistic trading, but also of statistical distributions, one can merely stand back and watch in awe. Attached is a graphic of what a rigged, backstopped and manipulated market is all about. The chart demonstrates Goldman's YTD trading track record: out of 194 trading days in 2009, the firm has made over $100 million on 116 occasions! This alone accounts for $11.6 billion in revenue (and is likely much more as Goldman could have easily had a $1 billion trading day in the rightmost bracket as it is open ended). Assuming midline averages for any given bucket and multiplying by the amount of days that the firm traded within these, Goldman Sachs has made $15 billion courtesy of the skewed and very highly improbable (but not impossible, thank you taxpayers and Ben Bernanke) chart.

And a more granular read, demonstrates that as the year has progressed, Goldman has become much better at extracting larger wins and minimizing losses. The firm lost money on just 3 days in the last two quarters. Is this a ponzi scheme? We surely don't know absent additional information (which will never be forthcoming, despite that GS is a public company). Is this comparable to the returns generated by a ponzi scheme? Absofuckinlutely.

Can the SEC please dissolve itself already and save taxpayers at least a little money?

 

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Wed, 11/04/2009 - 12:23 | 119660 chet
chet's picture

Makes me sick.  How these people can consider themselves champions of private enterprise is beyond me.  They ought to consider themselves government employees.

Wed, 11/04/2009 - 12:26 | 119667 whydtinogo
whydtinogo's picture

If history repeats then some of them probably will be!

Wed, 11/04/2009 - 14:35 | 119922 miker
miker's picture

Who do we think was behind this market run-up in the last couple of quarters?  Geithner endorsed GS's offer to buy the market up by deftly suppressing the sell side in their market making function.  Of course they need to be compensated for all of this work!  The US Government is in bed with GS (not the other way around).  

Wed, 11/04/2009 - 16:33 | 120126 Anonymous
Anonymous's picture

Or, could it be that the "government" is THEIR employee?

Wed, 11/04/2009 - 19:53 | 120386 Anonymous
Anonymous's picture

http://www.usagold.com/federalreserve.html

YOU BE THE JUDGE.THE ENTIRE ARTICLE CAN BE FOUND AT THE URL ABOVE.

This information also eluded fellow conspiracy theorist Gary Kah, who disagreed with Mullins on who owns the New York Fed. His Swiss and Saudi Arabian contacts identified the top eight shareholders as the Rothschild Banks of London and Berlin; Lazard Brothers Banks of Paris; Israel Moses Seif Banks of Italy; Warburg Bank of Hamburg and Amsterdam; Lehman Brothers of New York; Kuhn, Loeb Bank of New York; Chase Manhatten; and Goldman, Sachs of New York (Kah, p. 13). It is impossible to verify Kah's information because it is not known who his "contacts" were. Nevertheless, Kah's list differs substantially from Mullins' compilation. Most interestingly, in Kah's list foreigners own the New York Fed directly without having to own majority interests in U.S. banks, as is the case with Mullins' list. The discrepancies in the two lists mean that at least one of them is wrong, and possibly both. Kah's list is the bogus one because no public stock has ever been issued, so it is not possible for anyone on Kah's list other than Chase Manhatten to own shares of the New York Fed.

Wed, 11/04/2009 - 12:25 | 119664 Mad Max
Mad Max's picture

So we're now subjects of the most advanced banana republic yet?

Wed, 11/04/2009 - 12:39 | 119689 DaveyJones
DaveyJones's picture

agree with everything except that "advanced" part

http://www.youtube.com/watch?v=79U0RKEU4TI

Wed, 11/04/2009 - 12:26 | 119666 spekulatn
spekulatn's picture

OUTFRIGGINSTANDING stuff ZH.

Well done T.D.

 

"MARK IT ZERO, DUDE"

Wed, 11/04/2009 - 12:27 | 119669 AR
AR's picture

GREAT report.  Think of it... All of Goldman's competitors are taken out (for most part). The government retains Goldman to consult them on virtually ALL financial matters. Government, thus... allows Goldman to formulate policy, and gain inside information on all matters of policy. Goldman front-runs the entire marketplace. President Obama endorses these acts.  Goldman borrows money from government (taxpayers). Then, Goldman STEALS from taxpayers, government, and all investors in the market (as evidence of the probabilities as shown above). Gentlemen, this is NOT called Democracy, Socialism, or even Communism. This is called THEFT by order of a legalized Ponzi Scheme enabled by the United States Government and your President.  No one is safe anymore from the deceit, theft, and manipulation.  Merry Christmas. Bend over... this is our future.

Wed, 11/04/2009 - 12:44 | 119697 deadhead
deadhead's picture

very well spoken AR.  +100

Tyler, please get this out to Arianna.  She does not have writers with a tenth of your ability and I mean no disrespect to those folks.  This shit has got to stop.

Wed, 11/04/2009 - 12:49 | 119709 Anonymous
Anonymous's picture

Very well done. Don't forget Al Gore has been reaping millions from his green initiatives (Inconvenient Truth, Mr.Gore?)and consulting with former Goldman Sachs' executives. I don't know if they'll get tax & trade, but God bless the common man if it ever happens. GS gets richer and gas at the pump becomes more expensive due to the rise in taxes.

Wed, 11/04/2009 - 12:55 | 119724 Anonymous
Anonymous's picture

"all goldman's competitors taken out...". Huh? Excuse me, but I think there are still a lot of market particpants trading in the markets. TD's GS rant (his 57th this year) is about Goldman's prop trading prowess. To the extent that GS lost competitors, that would be in underwriting and agency trading. But TD is pointing out GS' "ponzi profits" in prop trading. Goldman competes against Mr Market in that endeavor.
Get a grip, boys. Be thankful we still have a profitable GS in our financial system.

Wed, 11/04/2009 - 13:35 | 119786 deadhead
deadhead's picture

the land of the blind has many, many participants.

gs is a one eyed participant.

mrs. b., don't you have a charity event that you can make a fool of yourself at again?

 

Wed, 11/04/2009 - 13:35 | 119789 Anonymous
Anonymous's picture

Thanks for your input, Mr. Blankfein.

Wed, 11/04/2009 - 13:38 | 119798 Anonymous
Anonymous's picture

Thanks for your input, Mr. Blankfein.

Wed, 11/04/2009 - 14:27 | 119898 Cistercian
Cistercian's picture

 I sense the presence of the Evil One.

Wed, 11/04/2009 - 14:30 | 119907 Cistercian
Cistercian's picture

 The evidence points to cheating/manipulation and market dominance.Competing is not the right term.

Wed, 11/04/2009 - 15:09 | 119988 Careless Whisper
Careless Whisper's picture

@ Anon 119724   

It's called front running.

You are saying that Goldman's prop desk has better equity traders than everyone else; yes, they can defy the laws of standard deviation.

Impossible if it was a legit trading system.

If Jesse Livermore and Albert Einstein ran a hedge fund they couldn't have 64 out of 65 profitable days.

To simply say they have better traders is total bull shit.

 

Wed, 11/04/2009 - 17:15 | 120191 Brett in Manhattan
Brett in Manhattan's picture

Again, this is nothing new. The specialist system has always been a license to steal for the most powerful firms. I'm sure Labranche has a similar track record.

Poker is an easy game when you can see the other guys' cards.

Wed, 11/04/2009 - 19:14 | 120340 Careless Whisper
Careless Whisper's picture

The specialist system is only for the NYSE. The other exchanges have many market makers for each stock, so no one gets to look at the entire "book". There's something more going on than simply a peek at the specialist's book.

Poker is an easy game when you mark the cards.

http://www.duluthpoker.com/cheat/poker/live/card-marking/

 

Wed, 11/04/2009 - 13:23 | 119760 MinnesotaNice
MinnesotaNice's picture

Couldn't have said it better myself AR... kudos :-)

Wed, 11/04/2009 - 12:43 | 119695 JohnKing
JohnKing's picture

Just give them all your money.

Wed, 11/04/2009 - 14:50 | 119956 Coming Down in ...
Coming Down in Powdery Sparks's picture

You don't know when to quit, do ya Griswold?... Here's an idea: Why don't you give me half the money your were gonna to bet, then we'll go out back, I'll kick you in the nuts, and we'll call it a day!

Wed, 11/04/2009 - 12:44 | 119699 Anonymous
Anonymous's picture

What happens to the global economy when GS ends up with all the money in the world? Kind of like a game of Monopoly, game over, right?

Wed, 11/04/2009 - 13:37 | 119794 reading
reading's picture

No the rules in Monopoly state that if the bank runs out of money they can "print" more until the players have sufficient money on hand...so I guess that means we print and give to GS, print and give to GS in a constant circle jerk which is pretty much a parallel to what is going on today...

Wed, 11/04/2009 - 14:04 | 119848 Anonymous
Anonymous's picture

Don't forget the bonuses for failure!

Oh, sorry, I meant the best and brightest crooks.

It's a good thing I live a country away from Fraud Street.

Wouldnt hesitate to make hamburger from peoples unaccountable faces.

Wed, 11/04/2009 - 12:46 | 119702 Racer
Racer's picture

For them not to even bother hiding the ridiculous success rate they must be aided and given the green light to do so by the government and the fed. How else would they be so bold as to not even disguise it a little? Only because they know with 100% certainty that nothing will be done about it.

At least I know now what a complete scam this all is, thanks TD and ZH

 

Wed, 11/04/2009 - 13:05 | 119733 DaveyJones
DaveyJones's picture

"they know with 100% certainty that nothing will be done about it."

Nothing orthodox. History has disturbing pictures of comprehesive market "corrections." I can only think of two non-violent ways this can resolve. One, both political parties are highly organized criminal organizations. They must be removed at every level. Second, for the time being, we still have more money and economic power than them. The only way we can take control of this utterly corrupt economy is to shut it down. Take the hostages back.  All I can think of is some kind of Plastic Gandhi movement where we split into four or more groups and each group does their best to buy nothing for one week. It will hurt like hell but what other choice is there?       

Wed, 11/04/2009 - 13:16 | 119750 Anonymous
Anonymous's picture

The magical Ghandhi movement you're talking about, e.g. consumers not buying anything, has been happening for a while now... (and will continue for the forseeable future).

Wed, 11/04/2009 - 13:36 | 119791 Rainman
Rainman's picture

The newly won ability to walk right up to the Fed window for free money to run a rigged game is the real grease for the GS boyz.

Furthermore , the political " RECOVERY " theme is dependent on perceived growth and stability in the equity markets....even if done with flimsy, crooked and nefarious schemes. A rigged equity game softens the spanking of Ma and Pa Kettle, the pension funds, insurance cos., etc. At least for now, the artificial method looks more appealing to our government masters compared to more stimuli from the taxpayer.

Consequently, Team Obama has every incentive to go blind in the face of TD's revelations. If only those pesky bonuses weren't drawing so much negative attention !!

The only hope is that WSJ, FT , Bloom or others will take a hint and dive into this ......... something they are loath to do when the poop is scooped right onto their front porch by ZH. Also, the retail investor is already wary and suspicious of the Wall Street crowd and Washington. MSM reporting of a rigged game will chase the sideline cash even further away from the game.

There are a lot of dogs in this fight to deceive......sadly.

Thank God I found ZH.

Wed, 11/04/2009 - 12:49 | 119712 Anonymous
Anonymous's picture

OTOH, they did lose SOME money on 11 out of 194 days. I'm sure there are some corner delis that made money every one of those days, so they're not really doing that great.

Wed, 11/04/2009 - 12:53 | 119717 thebone
thebone's picture

As one trader from GS once told me, these gains were primarily driven by "stellar trading".....Fucking tools.

 

Wed, 11/04/2009 - 12:58 | 119726 Racer
Racer's picture

yes light years ahead in speed and front running orders

What's the point in playing a game of poker when the other party can see your cards?

Wed, 11/04/2009 - 13:40 | 119802 reading
reading's picture

Well, in the game they are playing they can see everyone's cards but no one can see theirs.  Working like a charm for them as the numbers show.

Wed, 11/04/2009 - 13:04 | 119732 Cheeky Bastard
Cheeky Bastard's picture

beyond words and any "standard" probability distribution model .....

Wed, 11/04/2009 - 15:12 | 119993 Careless Whisper
Careless Whisper's picture

beyond words?  i think of a few: front running, manipulation, inside information, government control.

Wed, 11/04/2009 - 13:06 | 119735 Anonymous
Anonymous's picture

Forwarded to local papers. Light a fire under them...

Wed, 11/04/2009 - 13:13 | 119745 Anonymous
Anonymous's picture

Racking up the free advertising!

Wed, 11/04/2009 - 13:25 | 119765 Cheeky Bastard
Cheeky Bastard's picture

WHAT

Wed, 11/04/2009 - 13:18 | 119754 phaesed
phaesed's picture

I wonder how much they're making off of Garmin right now :)

Wed, 11/04/2009 - 13:33 | 119782 laughing_swordfish
laughing_swordfish's picture

Squiddery, Squiddery, all is Squiddery.

Absolutely unbelieveable. If they tried this shit in Vegas, the Gaming Control Board would be all over them like a cheap suit.

64 out of 65 trading days positive. And I'm sure the one loss they had was deliberate to not make it look "too good".

But Squids have eight tentacles and THREE brains. Think what you could do with your trading if you had that kind of onboard typing and computing power.

KptLt. laughing swordfish

9er Unterseeboote Flotille

 

Wed, 11/04/2009 - 14:11 | 119867 Thalamus
Thalamus's picture

I believe their Madoff like returns come from the use of large amounts of capital forced into a small space/time continuum, creating inertia and guaranteed profits. 

Wed, 11/04/2009 - 14:24 | 119889 Cistercian
Cistercian's picture

 Epic obviousness Fail.

They are criminals.Untouchable ones.

 

 For now.

Wed, 11/04/2009 - 14:24 | 119890 Anonymous
Anonymous's picture

don't those numbers also reflect their agency trading commissions? how do they stack up to the other players.. i would presume that most of the firms make money almost every day when you include agency commissions.

Wed, 11/04/2009 - 14:26 | 119893 thebone
thebone's picture

Keep in mind these numbers are not exclusively from the prop desk...It also includes commissions from US shares, ETF, Futures desk etc...As a one delta sell side shop, they theoretically should never really lose money. The Futures business alone generates nearly 5M a day in revenue strictly from execution with virtually no risk.

But the real racket takes place on the equity desks where they bid up positions all day as "inventory" before unloading them to clients at the close.....How regulators don't catch on to that nobody will ever know...

 

Wed, 11/04/2009 - 14:34 | 119921 Winisk
Winisk's picture

I have a sneaking suspicion that they get away with this corruption because everyone who has taken a spanking in their retirement fund are quietly breathing a sigh of relief that markets have rebounded from the abyss.  They don't want to hear how this rally was orchestrated. ZH and Denninger are trying mightily to agitate the public who are scared shitless of seeing their retirements fall apart should the truth get any traction. Politicians probably realize they have the quiet approval of the investor class. Just a guess. Groping for explanations for this nonsense.

Wed, 11/04/2009 - 14:49 | 119952 Anonymous
Anonymous's picture

I am proud to be a Member of Zero Hedge.Very Proud.
Please read my Article.I references this post.

http://seekingalpha.com/instablog/501338-john-mccloy/34340-every-patriot...

Wed, 11/04/2009 - 17:09 | 120179 Greyzone
Greyzone's picture

While the wealthy plan to get wealthier, history suggests this might not end quite as nicely as they hope. The situation is getting dangerous, and unlike other nations, the US is still not quite housebroken, especially all those war vets who are being screwed by these same wealthy bastards.

Wed, 11/04/2009 - 15:25 | 120006 baserunr
baserunr's picture

If I had a bating average like that, I would still be playing, and making more than A-Rod and Mark T. combined....

Wed, 11/04/2009 - 16:36 | 120130 Anonymous
Anonymous's picture

salvadorviega, chupa-me os tomates se faz favor.

Wed, 11/04/2009 - 20:31 | 120422 loup garou
loup garou's picture

Quite a performance.

I doubt that even Jim Cramer could’ve done much better :)

Wed, 11/04/2009 - 21:44 | 120491 Chignos
Chignos's picture

Wait a minute, folks.  Maybe these GS profits are as cooked as Madoff's.  Remember: Believe nothing of what you hear and only half of what you see.

Wed, 11/04/2009 - 22:13 | 120509 time123
time123's picture

I can see how they can do this on good days with fast supercomputers and exceptionally good "parallel" HFT software written by the best brains in the world.

But the consistency of being able to achieve it so many days out of the year is what is most impressive.

Good estimates of the upcoming data releases due to exceptionally good data collection, analysis, and estimation of their own (after all, they have the money and resources to do it on a large scale) may be what is helping them position properly in advance and then "finish the job" with HFT.

time123

admin: http://invetrics.com

Wed, 11/04/2009 - 22:42 | 120526 Anonymous
Anonymous's picture

Without more information, who's to say there's a statistical improbability? I understand GS may present its numbers this way, but if I charted in buckets the number of people who die aged in bucket x-y, and my final bucket was 40+, would you be screaming "statistical improbability" because the highest bar was at the right tail?

I hate GS as much as you, but a few less sycophantic posts and more individual responses are always nice in the comments section.

Wed, 11/04/2009 - 23:07 | 120544 Anonymous
Anonymous's picture

Soon i will start my own hedge fund....designed to fuck Goldman in the ass...no one thinks its possible....winning trades everyday..i think it is, just a extremely well thought out plan (blackhat) google that term, superior mathematics, some luck and inside men.
Call me ambitious but I think it can be done.

Thu, 11/05/2009 - 15:33 | 121138 Anonymous
Anonymous's picture

It's called arbitrage trading. Look it up. Fully hedged, almost risk free profits provided you're fast enough. Understand what you're talking about before deciding to open your mouth with accusations. Educate yourself.

Thu, 11/05/2009 - 17:39 | 121328 Anonymous
Anonymous's picture

Really, that's the best you could come up with, arbitrage trading? Come on shill, every firm does arbitrage trading, the point is GS front-runs the market and therefore has an unfair advantage.

Thu, 11/05/2009 - 23:45 | 121784 Anonymous
Anonymous's picture

What strikes me as improbable is that they lost money on any days, given the level of insider info they're working with

There must be some reall dumbasses over there!

Mon, 11/09/2009 - 15:22 | 124937 Anonymous
Anonymous's picture

Secret Software & Naked Short Selling
We need NSS arrests - not Insider Trading arrests
It is November 5th, 2009 at high noon and the SEC is all over the news about another arrest. They are all on stage giving this big press conference on 14 arrests for Insider Trading connected to the Galleon Group investigation. Is it Insider Trading? The Government wanted the world to believe this caused the financial meltdown on Wall Street. Three weeks earlier the SEC made the first arrest for Insider Trading involving Raj Rajaratnam and 5 other people on Wall Street.
It is my opinion that the Government and the SEC is involved in a cover up to try and make people think that it was insider trading that caused the crisis of 2008. Let the truth be known. The news media, along with Goldman Sachs and many other Wall Street companies and people of power are all involved in the biggest cover up in the history of the United States. It involves greed to the fullest extend. The SEC is responsible, under the leadership of Christopher Cox in July 2007, the Securities Exchange Commission abolished the Up Tick rule. The elimination of the Up Tick rule created a wave of corruption that grew out of control, based on Naked Short Selling and the use of secret software and super fast computers.
Insider trading has played a role in the financial crisis, yet the story not being told by the news media is the arrest of a Goldman Sachs employee who tried to steal Goldman Sachs secret software. This arrest came over the July 4th Holiday week-end and was aired briefly on a Saturday night on TV and then came Monday July 6th, 2009 and the story disapeared. A few weeks later Goldman Sachs reported its FY 2009 2nd QT earnings ( April – May -June ) and Goldman Sachs made over $100 million dollars a day in 46 of the 64 trading days for that quarter. How could this be possible after a 17 month recession. Wall Street changed two major Laws. The first being the use of decimal places (2001 )instead of fraction. Years later and after they lobbied for the removal of the Up Tick rule ( 2007 ) the secret software was designed and in place ready to go into full operation now that Wall Street was allowed to naked short sell millions upon millions of shares that Goldman Sachs and other hedge funds didn’t even own and failed to deliver. Their greed took over, who wouldn’t , when Goldman Sachs was making over $100 million a day in trading. They destroyed companies like Sirius XM radio and overstock.com and many others. Then they began naked shorting the banking industry and attacking each other.
This is the truth that the news media, corporate Amercia, the SEC, the Government, Goldman Sachs, Hank Paulson and the many others that were in power have not told the American people and the world. Now, as I write this letter, they are now trying to con the world into thinking it was insider trading that caused 95% of the middle class workers to lose 20% - 60 % of their investments and 401K’s.
In the end the Entire story will be told and I hope I get my chance to tell it. Check the facts. There was an arrest of that Goldman Sachs employee in July 2009. Why was it covered up? Where are the arrests for Naked Short Selling and Goldman Sachs use of their secret software that stole the wealth off investors all across the country. It will go down as the biggest scandal in history.

Richard Keane
November 7th, 2009

Mon, 11/09/2009 - 17:12 | 125087 Anonymous
Anonymous's picture

Secret Software & Naked Short Selling
We need NSS arrests - not Insider Trading arrests
It is November 5th, 2009 at high noon and the SEC is all over the news about another arrest. They are all on stage giving this big press conference on 14 arrests for Insider Trading connected to the Galleon Group investigation. Is it Insider Trading? The Government wanted the world to believe this caused the financial meltdown on Wall Street. Three weeks earlier the SEC made the first arrest for Insider Trading involving Raj Rajaratnam and 5 other people on Wall Street.
It is my opinion that the Government and the SEC is involved in a cover up to try and make people think that it was insider trading that caused the crisis of 2008. Let the truth be known. The news media, along with Goldman Sachs and many other Wall Street companies and people of power are all involved in the biggest cover up in the history of the United States. It involves greed to the fullest extend. The SEC is responsible, under the leadership of Christopher Cox in July 2007, the Securities Exchange Commission abolished the Up Tick rule. The elimination of the Up Tick rule created a wave of corruption that grew out of control, based on Naked Short Selling and the use of secret software and super fast computers.
Insider trading has played a role in the financial crisis, yet the story not being told by the news media is the arrest of a Goldman Sachs employee who tried to steal Goldman Sachs secret software. This arrest came over the July 4th Holiday week-end and was aired briefly on a Saturday night on TV and then came Monday July 6th, 2009 and the story disapeared. A few weeks later Goldman Sachs reported its FY 2009 2nd QT earnings ( April – May -June ) and Goldman Sachs made over $100 million dollars a day in 46 of the 64 trading days for that quarter. How could this be possible after a 17 month recession. Wall Street changed two major Laws. The first being the use of decimal places (2001 )instead of fraction. Years later and after they lobbied for the removal of the Up Tick rule ( 2007 ) the secret software was designed and in place ready to go into full operation now that Wall Street was allowed to naked short sell millions upon millions of shares that Goldman Sachs and other hedge funds didn’t even own and failed to deliver. Their greed took over, who wouldn’t , when Goldman Sachs was making over $100 million a day in trading. They destroyed companies like Sirius XM radio and overstock.com and many others. Then they began naked shorting the banking industry and attacking each other.
This is the truth that the news media, corporate Amercia, the SEC, the Government, Goldman Sachs, Hank Paulson and the many others that were in power have not told the American people and the world. Now, as I write this letter, they are now trying to con the world into thinking it was insider trading that caused 95% of the middle class workers to lose 20% - 60 % of their investments and 401K’s.
In the end the Entire story will be told and I hope I get my chance to tell it. Check the facts. There was an arrest of that Goldman Sachs employee in July 2009. Why was it covered up? Where are the arrests for Naked Short Selling and Goldman Sachs use of their secret software that stole the wealth off investors all across the country. It will go down as the biggest scandal in history.
I give you permission to re-print this letter. Please follow up and investigate. This story needs to be told. Please contact me. It is exactly what is taken place.

Richard Keane

Fri, 02/25/2011 - 07:29 | 996410 george22
george22's picture

And a more granular read, demonstrates that as the year has progressed, Goldman has become much better at extracting larger wins and minimizing losses. The firm lost money on just 3 days in the last two quarters. Is this a ponzi scheme? We surely don't know absent additional information (which will never be forthcoming, despite that GS is a public company). Is this comparable to the returns generated by a ponzi scheme? Absofuckinlutely.

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