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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 | Link to Comment 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 | Link to Comment whydtinogo
whydtinogo's picture

If history repeats then some of them probably will be!

Wed, 11/04/2009 - 14:35 | Link to Comment 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 | Link to Comment Anonymous
Wed, 11/04/2009 - 19:53 | Link to Comment Anonymous
Wed, 11/04/2009 - 12:25 | Link to Comment Mad Max
Mad Max's picture

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

Wed, 11/04/2009 - 12:39 | Link to Comment DaveyJones
DaveyJones's picture

agree with everything except that "advanced" part

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

Wed, 11/04/2009 - 12:26 | Link to Comment spekulatn
spekulatn's picture

OUTFRIGGINSTANDING stuff ZH.

Well done T.D.

 

"MARK IT ZERO, DUDE"

Wed, 11/04/2009 - 12:27 | Link to Comment 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 | Link to Comment 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 | Link to Comment Anonymous
Wed, 11/04/2009 - 12:55 | Link to Comment Anonymous
Wed, 11/04/2009 - 13:35 | Link to Comment 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 | Link to Comment Anonymous
Wed, 11/04/2009 - 13:38 | Link to Comment Anonymous
Wed, 11/04/2009 - 14:27 | Link to Comment Cistercian
Cistercian's picture

 I sense the presence of the Evil One.

Wed, 11/04/2009 - 14:30 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment MinnesotaNice
MinnesotaNice's picture

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

Wed, 11/04/2009 - 12:43 | Link to Comment JohnKing
JohnKing's picture

Just give them all your money.

Wed, 11/04/2009 - 14:50 | Link to Comment 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 | Link to Comment Anonymous
Wed, 11/04/2009 - 13:37 | Link to Comment 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 | Link to Comment Anonymous
Wed, 11/04/2009 - 12:46 | Link to Comment 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 | Link to Comment 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 | Link to Comment Anonymous
Wed, 11/04/2009 - 13:36 | Link to Comment 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 | Link to Comment Anonymous
Wed, 11/04/2009 - 12:53 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment Cheeky Bastard
Cheeky Bastard's picture

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

Wed, 11/04/2009 - 15:12 | Link to Comment 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 | Link to Comment Anonymous
Wed, 11/04/2009 - 13:13 | Link to Comment Anonymous
Wed, 11/04/2009 - 13:25 | Link to Comment Cheeky Bastard
Cheeky Bastard's picture

WHAT

Wed, 11/04/2009 - 13:18 | Link to Comment phaesed
phaesed's picture

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

Wed, 11/04/2009 - 13:33 | Link to Comment 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 | Link to Comment 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 | Link to Comment Cistercian
Cistercian's picture

 Epic obviousness Fail.

They are criminals.Untouchable ones.

 

 For now.

Wed, 11/04/2009 - 14:24 | Link to Comment Anonymous
Wed, 11/04/2009 - 14:26 | Link to Comment 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 | Link to Comment 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 | Link to Comment Anonymous
Wed, 11/04/2009 - 17:09 | Link to Comment 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 | Link to Comment 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 | Link to Comment Anonymous
Wed, 11/04/2009 - 20:31 | Link to Comment 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 | Link to Comment 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 | Link to Comment 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 | Link to Comment Anonymous
Wed, 11/04/2009 - 23:07 | Link to Comment Anonymous
Thu, 11/05/2009 - 15:33 | Link to Comment Anonymous
Thu, 11/05/2009 - 17:39 | Link to Comment Anonymous
Thu, 11/05/2009 - 23:45 | Link to Comment Anonymous
Mon, 11/09/2009 - 15:22 | Link to Comment Anonymous
Mon, 11/09/2009 - 17:12 | Link to Comment Anonymous
Fri, 02/25/2011 - 07:29 | Link to Comment 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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