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Goldman's 42 $100MM+ Trading Days In Q2 - An Absolute, Unprecedented Record; Just Two Days Of Trading Losses
Goldman reported their $100MM+ trading days. It is a stunner: Goldman made over $100 million on 46 out of the 65 total trading days in Q2, 70% of total. Goldman made over $50 million on 58 of the 65 total trading days in Q2, 89.2% of total.
As a reminder, here is what GS' trading days looked like in Q1.
Wow. But surely this phenomenal improvement in daily P&L generation came as a result of the firm taking on more risk? Why, no Virginia- Goldman's VaR at the end of Q2 was lower than the end of Q1.
So let's see - progressivelly higher daily revenues on progressively lower "indicated" risk-taking. It is so painfully obvious that the traders at Goldman still have not figured out how to game the system.
Oh, and the 12 $100MM (at least) trading days jump in Q2 vs Q1, why that's exactly the cost to Goldman to pay down its TARP warrants. Goldman is so lucky - the company can just print money while trading and pay off its liabilties. One wonders if Ben Bernanke is at least a little concerned that GS has its own $ printing press courtesy of the fine folks at the SEC.
hat tip Nic
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What a dichotomy... so many unemployed... and the chosen becoming ultra-wealthy...it is a very sad world we live in right now. The 'trickle-down' theory is very broken.
Public Service Announcement
http://thetechnicaltakedotcom.blogspot.com/2009/08/public-service-announcement.html
No one is that good. I don't care who it is.
I agree completely. No one is that good.
46 for 65. If GS was a baseball player they would be batting just over 700 - and less than our friend from YouTube - where are you when we need you.
And if GS was a ball player hitting 700 they would not be making as much money - so what's the point ;-)
Pete
You guys are way off base. They just legitimized steroids f MLB. It is a Brave New World out there.
Markets don't work like that. These results are the most damning and arrogant financial rip-off I hope ever to see.
This is worse than Madoff. The GS board and exective staff should all be indicted for securities fraud.
Amen to that
There once was a guy this good, SLK/GS's largest day trader by volume until 01/02. SLK/GS always wanted to come visit him to help improve his performance and he would never let them in before 4PM.
He finally let them in early and 6 months later he was done.
Give us more details, please.
It is not .700, it is .892 (46+6+6/65) of 50+ Million days. Some might say it is .969 of trading days with a gain, but I ask you - if you don't make 50 Mil in a day, is it really worth going to work?
This reminds of Ivan Boesky...hmm he just kept picking winners????
Considering all SEC violations are being settled for peanutsI wouldn't be surprised that the GS policy is to break all SEC rules to save themselves. Worst case scanario is they're bankrupt and taxpayers will pay the fine. Best case scenario is they make money and nobody finds out. Intermediate case scenario is they're caught and pay a fine equivalent to one day's trading. Sounds like a good plan.
You or I would get in more trouble for taking a tuna fish sandwich...
http://cityroom.blogs.nytimes.com/2009/03/16/fired-over-a-tuna-sandwich-...
so if your going to steal, steal big!
If GS gets a quick look at trades before everyone else then that is illegal and insider trading, they should get the book thrown at them!
LOL..They wrote the book!!! Do you really think Mary Madoff Shapiro will bite the hand that feeds her???
Look at BAC/GE fine...there is no book....their writing it as we go along! System is a joke.
It's suppose to be a joke, its government agency. Do not log into Cash for Clunkers..its a government Trojen Horse virus...
Absolute proof of lying or cheating; take your pick.
I'll bet they intentionally book losses a few days each quarter to try to keep up the ruse that they actually take risk.
A $100M/day for the next year will have transferred about 1/12 of the combined value of two of the nation's largest pension funds (CalPers and CalSTRS: http://www.latimes.com/business/la-fi-calpers22-2009jul22,0,5416427.story) to the upper scum at GS; in twelve years, they will have it all--every last penny. This seems like a system that will last a long time...
And if the money ain't comin' from such places, it ain't comin' from nowherz!
People "just don't get" GS--and over a million of 'em wont be gettin' any pension because they don't get GS. Not that the people should be required to get anything: that was suppose to be the function of our "legal" system.
This is exactly where it's coming from. Not HFT, but large pension funds. The pension funds have no accountability to their clients. How is a California state employee supposed to complain about giving up trading 'edge' to GS? The managers of the funds are supposed to have a fiduciary duty, but they are getting paid either way. Why should they try to squeeze a better bid/offer out of GS?
There is no problem with making markets, providing liquidity, etc. However, when you are one of only a few select market makers, as mandated by the SEC, you have no incentive to make fair markets or provide liquidity.
Open the OTC marketplace! GS will still make money because they are the smartest traders, but the transparency will force tighter markets and make them have to use those high IQs.
I thought Calpers walked out of GS and Blackrock fund management.
Does anyone know anything else about the CalPERS/Blackrock relationship?
Calpers obviously made some horrendous investment decisions, but you can't manage 240 billion dollars in assets, trading with only a handful of OTC 'liquidity providers' and not get raped for at least a few billion a year. And how can retirees argue with performance? A few billion is only a few dollars per pension check amortized over 20 years. But a few billion is more significant when it's concentrated and paid out as a bonus to Wall Street.
http://www.reuters.com/article/reutersEdge/idUSTRE56S6UB20090729
Hey! I've been cloned!
Can someone tell me what page this trading info is on? I can't find it. Thanks.
ten minus ten equals
If you know someone is going to place an order to buy and you get there first and buy then sell it to them a fraction of a second later at a higher price then it is just printing money and should be banned immediately, not wait for 'comments' and opinions on it..
common sense.... it is stupid, illegal, daylight robbery!
STOP IT NOW!
LOL - you guys crack me up. you act like "GS" is an equity day trader sitting at home in his underwear, spilling coffee on the keyboard and throwing pencils at the monitor when a trade is not working.
"GS" is the aggregation of hundreds of position traders across equities, fixed income, currencies and commodities, in markets spanning the USA, europe, Asia, et al.
Do some of these traders have losing days? Of course! But when you aggregate the desks, net net, the firm makes money more often than not. Why? Because they are good, and because they control risk better than anyone, anywhere on Wall Street (2nd place is not even in the same ballpark).
So, please, take your conspiracy theories and populist nonsense and deposit it where it belongs - the rubbish bin.
Meanwhile go buy yourself some Goldman Sachs (ticker GS NYSE)
You know what guys like you crack me up...if they are SO GREAT...why did they need to switch to bank holding company, why did they need gov't loan, and all the other programs/handouts they were a beneficiary of?
Why?
How?
http://www.goldmansachs666.com/2009/08/some-us-bank-pay-from-performance...
without cheap funding from the FDIC they would actually making a loss
When you aggregate all the risks across thousands of trading desks, you don't arrive at 42 $100MM+ Trading Days.
Fuck you.
25586:
THEY ARE FUCKING BANKRUPT A HUNDRED TIMES OVER FOR TWO YEARS YOU CHUMP. HAVE YOU LOOKED AT THE STEAMING PILE OF SHIT ASSETS ON THEIR BOOKS?
DID YOU CATCH THE FUCKING BAILOUT, NUMB NUTS?
THEY ARE A ZOMBIE COMPANY WHO ARE NOT JUST CONTENT TO NUZZLE AT THE TAXPAYER TIT AS SOME FUCKING FRAUD OF A HOLDING BANK BUT INSTEAD THEY GO RIGHT BACK TO STEALING.
STEALING.
If you aggregate hundreds of traders in numerous markets worldwide, each of whom has his own brain, what you should get is less statistical outliers on any given day and a clustering around the mean (the mean being 'market' profits for a trading desk). The more people you take into your sample size, the less likely they are to be freakishly good in the aggregate. They might beat the market by a bit, but they wouldn't blow it out the water. And yes, as you say, the losing days might be rare, but the outsize gains should be equally rare.
What you get with Goldman is so obviously not normal, that it beggars belief. Somebody is getting skinned alive by all of this 'trading'.
Were you the guy telling me there was NO SUCH THING as a risk free trade?
Excuse me?
"GS" is the aggregation of hundreds of position traders across equities, fixed income, currencies and commodities, in markets spanning the USA, europe, Asia, et al.
Do some of these traders have losing days? Of course! But when you aggregate the desks, net net, the firm makes money more often than not. Why? Because they are good, and because they control risk better than anyone, anywhere on Wall Street (2nd place is not even in the same ballpark)."
I believe Neophiliac is correct.
Fair markets do not work like this.
Your argument, based upon the assumption that this "aggregation of traders" are all equally capable and are all that much better than everyone else is undemonstrable and is in fact ludicrous.
They are skimming off $15,384,615 from the market every hour of the 6.5 hour trading day. That's $256,410 skimmed off every minute! Why is this shit being allowed happen!
I guess because their big donors? You know when your a big donor you don't expect to be treated like everyone else...so suck it up.
Friedman shouted at the event organizer, "You have lost so much money because of this . . . Why should we be treated like the $650 donors?"
GOLDMAN SACHS WIVES HATE TO WAIT
http://tinyurl.com/nf7lya
They are almost the only game in town. no body (no big player) is betting against them. There is no big rival out there.
I'm speechless.
You should be. An obedient citizen.
"The table has tilted, folks. The game is rigged. And nobody seems to notice. Nobody seems to care."
Now go back to your mundane striving.
Right on.
It's frontrunning, but so far it's legal frontrunning. Obviously everyone here knows that these returns metrics aren't just from good trading. They are from free call options they create from watching order flow.
Isn't FICC is the cash cow? I think you need to look at things like how many days did credit spreads tighten vs widen, how many days did the dollar strengthen vs. weaken, etc. to put their win rate into perspective.
Anybody who was massively long credit and short the dollar at the end of Q1 had phenomenal results, as did anyone massively long equities.
Basically, Q2 was a once in a lifetime opportunity to be long risk.
NO THIS IS ALL DUE TO FLASH ORDERS AND HIGH FREQUENCY TRADING AND FRONT-RUNNING
Are you serious? If so, you have been fed a pile of BS, because that statement couldn't be further from the truth.
Wow, just wow. I wanna GS t-shirt now.
Tyler, please make sure you blast this off to Schumer's office or other politicians favorable to stopping this nonsense!
Back in Aug. 07 my friends across the pond told me their U.S. investing strategy for their $100M investment fund was to start shorting U.S. banks and financial institutions as they were already experiencing the beginning of a financial crash in the UK. LIBOR was very high and they felt the time was right. They soon began shorting every major U.S. bank and financial institution except for Goldman Sachs.
They explained that "everyone knew GS was dirty and wouldn't hesitate to short their own clients" and they would not bet against them in a downturn. So in retrospect everyone knew GS was "dirty" then and they know it now the difference is GS can hide behind the veil of the common good while it goes about it's dirty business as usual.
Please explain this 'veil of common good' part?
I have not heard of a single human being outside Washington speak of any common good.
I hope you don't mean running up stocks to stupid valuations so that they can short their clients again?
I have GS envy :(
Who cares if the US economy goes to hell, if I worked there atleast I could enjoy the final days before the economic rapture with martinis, 6 crazy latvian hookers on a big yacht and CNBC.
Sounds a bit like Hell to me.
GS became the principal to a rather LARGE degree on some juicy debt trades during 1H2009 and 2Q2009. Where the spreads were the juiciest, GS absolutely engaged in front-running and acted as a market-maker in the debt markets...and "risked" their own capital. I wouldn't really call it risking when they knew who was on both sides of the action and just played the middle.
Here's the catch, NO ONE is policing these type of transactions. It's not like the equity side. Sure, GS acted without a moral conscience, but, by definition, they did not act illegally.
One thing that I can guarantee...if we see a 2nd leg down on the credit side of things...GS will be NO WHERE to be seen and their daily exposure will drop dramatically.
This is a very good point, and has been overlooked by most of the analyst community. If you think GS raked the equity markets, they literally DOMINATED fixed income trading since March.
Picking and choosing what they wanted to to on the "spread trade" was almost certainly front running. And I don't know which is more appalling: Goldman's brazeness in gaming both sides of the trade-- or the sheer lack of anyone in a policing role to question what is going on.
Sure, what Goldman is doing is probably legal. But it's sleazy as all get out, and it still befuddles me why anyone would want to be a Goldman client. They will eat their own if they need to, and not think twice about it.
Now that spreads have tightened, I just wonder where Goldman will do their picking next? We can start, I gather, with the new issue market in Tresuries. And the market is still pretty ripe from the pump to do a lot more secondary deals.
A lot of clients don't 'want' to be GS clients. They have to trade with someone, because fund X is mandated to have at least Y% of capital invested in AAA bonds. The manager has about 4 choices of where to do the trade. All 4 banks show the same bond offer. Client knows he's giving up several million dollars, but has to do the trade. If the bonds were listed, the client would have about 30 different firms fighting over each other to make several thousand dollars profit, instead of millions. That's what happens in a listed market, you see where others are making money and try to get a piece for yourself, which tightens the spreads. Smart guys still win, but it's not free money.
Prorgram trading is getting all the press, but credit is where the real juice is.
They'd pick off their own mothers for 25 bps on a 500 bond trade.
$800 billion goes a long way. Masturbate, rinse and repeat.
No losers? Sure, keep hitting the offer till the end of the day...duh.
$800 billion goes a long way....
Why don't they just print whatever they want directly off of the printing presses at the Fed and call it what they want e.g. "revenue", "profit", etc. I mean why steal from the little guy when you don't need to "trade" or do anything at all really to "make" money? I think it's just pure sadism on Goldman's part - not only do they want to be rich, but they actually want everybody else to be poor.
yep, gekko. why just print when they can print AND steal. some of them probably know they are just a mafia oligarchy government welfare program. others at GS probably think they are capitalists. Hahaha. Love to see them try to win in a free market without all their government connections and money printing.
The GS guys I know are pretty much "B" class people - but insanely cultish about GS.
A lot of the money GS makes from trading is pilfered from their own clients.
Do we have a comparison to say, the last 3 or 4 yrs?
great question.
2 BIG 2 FAIL....EOM.
It seems like most of you "Non GS" folks are bitching about GS simply because you are jealous.. I am sure this company is involved in many illegal trades but so is almost every wall street firm. The only difference is that these guys are insanely succcessful and that makes you seethe with jealousy because you arent a beneficiary
anonymous #25781, if they did it in a free market without government power than fine I would be the first to congratulate. i am one of the biggest libertarian free market capitalists you will find. the point is that goldman has so much government power and they use big government to game it there way. they destroyed their competitors via government. and they got funny money to play with from government and taxpayer. So they aren't playing in a free market. They are a government welfare program. And they know how to work their government power. That's not capitalism. Its not free market or libertarian. It is like Russia-style oligarchy and mafia. I don't support that. Get it.
#25781 you remind me of the type of guy who watches a girl get raped and then gets asked why didn't he stop the assault...and then he says they were all doing it, so I thought it was okay...
how about this ...fuck you. fuck people like you...
game was never fair..but it never was in your face as corrupt as it is today.
Appears that GS has finally figured it out.. how to make money through all the legal hoops
Meanwhile the Govt tries to figure out how to regulate if at all.. but that requires a superior level of intellect which unfortunately they lack. THey should hire more GS folks as consultants to advice them on how to regulate GS and other wall street companies
Note that GS has a big influence on what is legal. Just because something is legal doesn't make it right. Just means they help define the laws that they must adhere to.
I like the math questions this website makes you solve before posting.. it weeds out the idiots.. lol.
questions are pretty basic but it is amazing how much crap can be weeded out by asking simple math questions.
makes me sick to my stomach. i am sick of this rigged "market". get goldman away from government. these idiot oligarchs are destroying capitalist free markets.
Why bitch about GS?
If GS has no genuine risk, write puts on GS.
It's candy from a baby.
Control risks - asshole if Goldman and the SEC didnt change shorting rules on a thursday afternoon last fall I think the day before options expirations the stock was going to join lehman and bear and merrill in the dustbin of history.
Control risks - AIG should be in BK, counterparties like GS would have been zeroed out and done in.
Control risks better than anyone else - take your propaganda elsewhere.
You should go watch Triumph of the Will - good German propaganda and maybe we can make a similar movie how GS is good for America and how much value added they are to society.
stop your whining; your jealous green envy is unbecoming
And yes, GS controls risk better than anyone else on Wall Street, by a moon shot. Second place isn't in the same league.
The proof of the pudding is in the eating, so get some Goldman Sachs (ticker GS: NYSE) and start eating
If GS wants to use their superior risk management skills, they should become a market making firm, acting as principal on the trades. Principals assume risk, and hedge by transfering risk to other areas. Some principal trading firms make billions, and GS probably would still make huge profits.
However, when a firm acts as both principal and agent on trades, it is impossible to accurately measure 'risk management' skills. Flipping trades from one client to another and taking a huge scalp is not 'risk management'. It is riskless arbitrage.
Pick one or the other, you can't have both sides. (well, apparently you can)
Where's the class action suit against GS?
The distribution of gains is thoroughly anomalous. In fact it's so illogical it begs for inquiry. On first glance it appears to be an exponential function, but that cant be because no one can step up to bat and clock 70% of hits for home runs. It cant happen except in an extremely limited sample size. The simple fact for any trader or firm is that there will be far more singles and doubles than home runs. This distribution ought to resemble more of a bell curve with smaller gains and losses occurring much more frequently and the larger winning and losing days occurring much less frequently. It doesn't come close to doing that. A performance plot of even the most brilliant of traders will resemble a bell curve. Aggregate a battalion of brilliant traders, still a bell curve. The fact that they struck out only 2% of their at bats is suspicious enough but perhaps is possible in a strongly trending period. The ratio of home run days in relation to ordinary hits implies something more than trading. On the other hand, this graph might be a tad misleading. After a moments thought you can see the graph is merely the left half of the bell curve. I would like to see the graph extended to the right for a more complete picture. i.e. days of $125mm, $150mm, $200mm... Then the central question becomes how are they able to optimize their performance so greatly that they can skew the peak of the bell so far to the right that most days see them earning nearly $100mm? Is it accurate to call this "trading"? Shouldn't we come up with another term for this activity? Owning, jigging, rigging, ripping, robbing, running, snatching, stealing, thieving, taking, gunning, grabbing, winning... Trading this is not.
Great statistical analysis. Who requires that firms report +100mm trading days in a 10-Q? Is that a required disclosure by the SEC? And why aren't higher buckets required? Shouldn't the requirement be to report a reasonable distribution of trading profits? That would even cover years in the future when inflation causes firms to report trillions of dollars in trading pnl.
It's fraud.
This is 'too big to fail' philosophy. The Enrons of the world were found guilty after they became bankrupt. The 'too big to fail' entities backstopped by the Feds -- pff.. their shenanigans are not going to come out.
Precisely why Geithner had a meltdown. He doesn't like people opining on policy. That's the problem of the Czars, Federal reserve and investment bankers.
It seems like I also remember here on zero hedge, it being pointed out that GS was trading something like 700mm shares per day. If my recollections are correct, then $100mm per day / 700mm shares per day means they made about $0.14 per share on every trade! Thats $0.28 round trip. Thats VERY good. Far more than a $0.0015 rebate per share for "providing liquidity"!
But that's assuming all of their PNL came from equity trading and it is abundantly clear that equity trading is a rather small portion of their PNL. Let's be clear, the bulk of their PNL is not coming from Flash orders, SLP, dark pools, or even HFT. They made a killing in the fixed income markets where spreads were as wide as the grand canyon and there was a distinct lack of competition. They also crushed it by being long commodities and short the dollar. Most importantly, I think, (it seems to have been overlooked) is that they were short volatility. That seems to be one of the easiest trades of the decade, when the VIX was at 80. You don't think every one of their options books took advantage of this? Also, a lot of this comes from when they were designated as a bank holding company which allowed them to finance their positions at cheaper rates than they had experienced previously. According to some GS people I have talked to, they anticipated the liquidity crisis in short term borrowings and locked in most of their financing with long term loans (2-3 years). This has given them a major advantage over their competitors as they can now price all of their derivative and fixed income instruments more competitively.
Now I think the real question is how they achieved these results with the VaR that they have published. That seems like a bit of a head scratcher.
Lets ignore...the black swans of trading prowess, the SLP status earning 0.25-0.35c a useless and unmeaningful non-liquidity providing trade, lets ignore the taking of AIG to the wall, by squeezing the haircut, AIG CDS implosion, handouts from FED, no material exposure-but a handout would be nice), lets ignore the cheap FDIC money, missing December losses month on conversion to bank status, lets ignore the HFT algos(the possibility in the wrong hands of manipulating the market), lets ignore too...the front running(from time to time we may use our clients activity to better our own business internally), lets just ignore these ones for now.
And ask the simple question next...with all these profits, what taxes do you think they will pay this year?
Marginal, because they will up the payout to staff. Here the compound interest of the average and good tax payer manifests itself.
Last year GS managed to pay less then $7 on every $100...go figure.
And yeah they don't frontrun the markets... and they don't own regulation... and yeah they don't own the Governments... They are actually worse than Ambani Brothers here!!!
Hey assholes stop posting bullshit and lets analyize the data thats what masses are FOR!
Ok so we know GS got a government loan, but for how much? Also do we know to make profits like that you need to have a large cash pool to leverage equity, so maybe investment is transparent by this (although thats a long shot). Someone mentioned pension funds. link perhaps?
Also someone needs to post the gfinance link to GS, and then we begin the real discussion. Your opinions are praised for scruitizing and questioning such action, but you need to do much more work to entice the masses to follow.
http://www.google.com/finance?q=GS
And GS has been acieving all these winning without unfair advantages.
Not one person here has asked the obvious question before kicking off their rant, specifically,
Where did they make their money FI how much??,Equity how much?? Commodities how much??.
For each answer to how much, the next question is which ones are outsized?
Which leads to the next qestion, which outsized gains are from gaming the system? How much result from oligopoy advantqage.
After we get the answers then can rant more effectively about gaming and oligopoly profits.
Way too much testosterone, way to little cool objective analysis thought in this room.
NET P/L per 10Q
Equity 5b YTD
FICC 13b YTD
*FICC- Credit trading, Interest Rate Products, Commodities,
No further breakout provided in 10Q.
EXTREMELY interesting disclosur: P 124.
Market Risks NOT included in VAR (this gives an indication of the value of the benefit of the VAR exemption)
1.2 Billion (10% sensitivity- not sure what that means or how to make it comparable to Var, except back of the envelope. If 10% is 2 std sensitivity it can be (kind of)added to Var)
REPORTED VAR IS ONLY 220 Million, which does NOT include this 1.2 BILLION risk exposure
1.2B = 524m Debt Risk+ 617M Equity Risk
soon enough someone has got to be figuring out how to get goldman at their own game. wait til the fish find out a position gs has on. that will be funny. real funny. i want to see the oligarch mafia GS welfare criminals crying help. who will buy goldman's assets?
Denninger has nailed this perfectly by comparing this to the Madoff fiasco... let's not hear any "hoocouldanode" outrage when this finally hits the fan, but hey, maybe they just are better than all the other smart people on the planet trying to get which investing... http://market-ticker.denninger.net/archives/1296-Is-This-Statisitically-...
make that get RICH investing...
From 10-Q "VaR is the potential loss in value of trading positions due to adverse market movements over a defined time horizon with a specified confidence level.
For the VaR numbers reported below, a one-day time horizon and a 95% confidence level were used. This means that there is a 1 in 20 chance that daily trading net revenues will fall below the expected daily trading net revenues by an amount at least as large as the reported VaR."
The first sentence defines VaR as negative PnL. The very next sentence says VaR is chance of PnL below expected daily revenues. They don't say what expected revenue is. Obviously higher than 200 million.
But Goldman has paid us $1.1b for their warrants. Can't we just call it a day?
EXTREMELY interesting disclosur: P 124.
Market Risks NOT included in VAR (this gives an indication of the value of the benefit of the VAR exemption)
1.2 Billion (10% sensitivity- not sure what that means or how to make it comparable to Var, except back of the envelope. If 10% is 2 std sensitivity it can be (kind of)added to Var)
REPORTED VAR IS ONLY 220 Million, which does NOT include this 1.2 BILLION risk exposure
1.2B = 524m Debt Risk+ 617M Equity Risk
How many GS boys have been running the show in the federal government and for how long? Why would anyone not think they could get favorable treatment in all matters financial is beyond me. The playing surface is tilted so play with it. What makes you think life is fair. I wish it was but I would not bet against them.
Well it's not fair if it's statistically impossible, this goes beyond favorable treatment, and since this is a zero sum game it means the system is in fact rigged or manipulated and they are skimming.
2 down trading days. how the f*** is that possible?
Doesn't GS do all PPT trades?.....case closed!
Take that, Markopolos...
Any chance Goldman is managing the Fed's book?