mdman Posted August 5, 2009 Share Posted August 5, 2009 From zerohedge 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. 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 what caused this performance? 1. brilliant performance by brilliant traders in an honest market (although even then, such a run seems statistically unlikely if the markets follow a random walk) 2. frauds and scams 3. improved margins 4. GS traders can predict the future Any ideas anyone? Quote Link to comment Share on other sites More sharing options...
@contradevian Posted August 5, 2009 Share Posted August 5, 2009 From zerohedgeSo what caused this performance? 1. brilliant performance by brilliant traders in an honest market (although even then, such a run seems statistically unlikely if the markets follow a random walk) 2. frauds and scams 3. improved margins 4. GS traders can predict the future Any ideas anyone? I reckon goldmans have invented time travel, and they should reveal all to the world. Quote Link to comment Share on other sites More sharing options...
swissy_fit Posted August 5, 2009 Share Posted August 5, 2009 From zerohedgeSo what caused this performance? 1. brilliant performance by brilliant traders in an honest market (although even then, such a run seems statistically unlikely if the markets follow a random walk) 2. frauds and scams 3. improved margins 4. GS traders can predict the future Any ideas anyone? I reckon I could trade pretty well if all my friends were in government. Quote Link to comment Share on other sites More sharing options...
Minos Posted August 5, 2009 Share Posted August 5, 2009 I'm surprised there were that many days of losses. Quote Link to comment Share on other sites More sharing options...
The Spaniard Posted August 5, 2009 Share Posted August 5, 2009 I'm surprised there were that many days of losses. Keeping up appearances, maybe. Quote Link to comment Share on other sites More sharing options...
stuckmojo Posted August 5, 2009 Share Posted August 5, 2009 Keeping up appearances, maybe. yeah, not making it look "too" obvious. Quote Link to comment Share on other sites More sharing options...
@contradevian Posted August 5, 2009 Share Posted August 5, 2009 ..and just enough to pay down their TARP warrants too. Those guys are geniuses. Quote Link to comment Share on other sites More sharing options...
IMHAL Posted August 5, 2009 Share Posted August 5, 2009 The market is currently distorted, it is driven by the politics of bailouts - GS are in the corridors of power - they know what policy is coming and when and also know its impact on the market. Whats so clever about that? Quote Link to comment Share on other sites More sharing options...
mdman Posted August 5, 2009 Author Share Posted August 5, 2009 ..and just enough to pay down their TARP warrants too. Those guys are geniuses. I don't think they are. The real geniuses are the ones running JPM. No-one is hassling them even though they're up to it too with their incestuous Fed relationships, giant derivatives book and dodgy BS takeover. They have much better PR than GS Would be interested in the opinion of any traders on this performance record Denninger is getting a touch denningitic over this too Is this statistically reasonable? Quote Link to comment Share on other sites More sharing options...
Joey Buttafueco Jr Posted August 5, 2009 Share Posted August 5, 2009 From zerohedgeSo what caused this performance? 1. brilliant performance by brilliant traders in an honest market (although even then, such a run seems statistically unlikely if the markets follow a random walk) 2. frauds and scams 3. improved margins 4. GS traders can predict the future Any ideas anyone? 5. Making markets Quote Link to comment Share on other sites More sharing options...
Deckard Posted August 5, 2009 Share Posted August 5, 2009 So what caused this performance?Any ideas anyone? Wider spreads on OTC instruments, including all categories of bonds. The article doesn't just refer to equities trading, does it? Quote Link to comment Share on other sites More sharing options...
DiggerUK Posted August 5, 2009 Share Posted August 5, 2009 There doesnt seem to be much of a puzzle to Goldman's amazing performance if the suggestion in this piece is accurate. Remember the FBI arresting one Serge Aleynikov on July 4th and charging him with having some GS software programmes ? Well, if you have forgotten, this article will remind you of the details. For those who have an idea how traders operate it is a highly plausible account. If any computer geeks understand about algorithms and latency ratios all the better. Even if you know nothing of these concepts you will after digesting the arguments put in the link. At two pages it is not a soundbite, but if you stick with it you just might even start to believe Cyberdyne Systems isn't so far fetched. http://www.atimes.com/atimes/Global_Economy/KH05Dj03.html Quote Link to comment Share on other sites More sharing options...
Joey Buttafueco Jr Posted August 5, 2009 Share Posted August 5, 2009 There doesnt seem to be much of a puzzle to Goldman's amazing performance if the suggestion in this piece is accurate.Remember the FBI arresting one Serge Aleynikov on July 4th and charging him with having some GS software programmes ? Well, if you have forgotten, this article will remind you of the details. For those who have an idea how traders operate it is a highly plausible account. If any computer geeks understand about algorithms and latency ratios all the better. Even if you know nothing of these concepts you will after digesting the arguments put in the link. At two pages it is not a soundbite, but if you stick with it you just might even start to believe Cyberdyne Systems isn't so far fetched. http://www.atimes.com/atimes/Global_Economy/KH05Dj03.html I hear a rumour that investment banks operate in markets other than equity. I hope this is the case otherwise I have been lead on a wild goose chase. Quote Link to comment Share on other sites More sharing options...
R K Posted August 5, 2009 Share Posted August 5, 2009 They took out the competition DUH!!! Quote Link to comment Share on other sites More sharing options...
STRLondon Posted August 5, 2009 Share Posted August 5, 2009 they had an overhang of stock from the first quarter and are still selling it back into the market at massive profits? Quote Link to comment Share on other sites More sharing options...
MOP Posted August 5, 2009 Share Posted August 5, 2009 Quote Link to comment Share on other sites More sharing options...
Phil_Spencer Posted August 5, 2009 Share Posted August 5, 2009 they will be doing larger flows of vanilla trades, and have also benefitted from larger spreads. It's also easier to hedge vanilla books so less losses from market moves and as a bigger percentage of their business will be vanilla, they have less risk. There is little appetite for exotics currently (although increasing form a low-base) and these are the books that often cause the big/consistant losses especially in volatile markets. Although lack of liquidity and higher spreads have made risk management of existing books more costly and harder to mark accurately. Quote Link to comment Share on other sites More sharing options...
ParticleMan Posted August 5, 2009 Share Posted August 5, 2009 (edited) Basically GS are using computers close to the exchange with some smart software to watch the trades going into the market and able to take a short cut to the market to carry out a transaction which will make them some money based on volume. I heard they'd tapped 1.21 jigowatts from the third rail just near Times Square and were using it to power their Delorean. Edited August 5, 2009 by ParticleMan Quote Link to comment Share on other sites More sharing options...
ParticleMan Posted August 5, 2009 Share Posted August 5, 2009 (edited) Seriously people, Occam's razor applies. With the amount of fiscal spooge that's been force-fed into the markets of late it's little surprise that price levels are just plain wrong (well duh, this is kinda the point). All GS are doing (and for that matter, animals who could eat GS for breakfast and still shit them by morning tea) is moving prices to their correct levels. And pocketing the NPV of the difference. Edited August 5, 2009 by ParticleMan Quote Link to comment Share on other sites More sharing options...
Joey Buttafueco Jr Posted August 5, 2009 Share Posted August 5, 2009 2.I've touched on this subject in this thread. http://www.housepricecrash.co.uk/forum/ind...t&p=2049732 "AI is also used by some financial companie to do their buying and selling and are actually better traders than humans although the programs are more cautious making less transaction than a trader would typically make over a year. I even suspect BullionVault.com use one becuase if you trade out of hours (so its 1:1) you can see how the program responds to buy and sell requests to make money for Bullionvault. AI/Bots are also used to play poker online as well despite online poker sites banning the use of bots, depending on how well you write the bot depends on whether you get caught or not, but you can make a lot of money doing nothing. In time AI will replace lots of transactions and only the best programmers will win but you need to hook it into more and more info which is why the net is a good source for info in realtime, like monitoring news outlets online for stories weighting words in articles and comments to gauge public sentiment which could affect the share price of a listed company for example." Basically GS are using computers close to the exchange with some smart software to watch the trades going into the market and able to take a short cut to the market to carry out a transaction which will make them some money based on volume. Whether this practice will be allowed to continue I dont know but there is believe it or not a computer language called Gold which is used in the finance industry. Plus many GS analyst can also write their own software to watch their speciality market/financial interest. There is however a weakness in the Goldman Sachs system which can be exploited and it might be in the near future we start to see this exploition! AI versus AI Do you think Goldman operate in other areas than just equities? Quote Link to comment Share on other sites More sharing options...
ParticleMan Posted August 5, 2009 Share Posted August 5, 2009 Do you think Goldman operate in other areas than just equities? I think they've been selling burgers 'dogs and ice-creams from a van just near here. Curse those margin pocketing city slickers. Damn their beady eyes. Quote Link to comment Share on other sites More sharing options...
?...! Posted August 5, 2009 Share Posted August 5, 2009 When central banks announced rates will be held low for the near to mid term a marketwide rally was triggered. Why? What is the cost of funding? What are market wide P/E ratios? When funding costs (interest rates) < 1 / price earnings ratios.... You buy. GS have access to the cheapest funding and can leverage to a greater extent having repaid the taxpayer, so they have the widest positive carry margin. Quote Link to comment Share on other sites More sharing options...
ParticleMan Posted August 5, 2009 Share Posted August 5, 2009 GS have access to the cheapest funding and can leverage to a greater extent having repaid the taxpayer, so they have the widest positive carry margin. Well, they have access to funding at basis costs equivalent to their true peers (few of whom are listed). The real profit center has been Reserves and their penchant for price fixing (ever seen someone nail a parrot to a perch?). Goldman (et al) are perfectly capable of trading the fiasco that resulted. Quote Link to comment Share on other sites More sharing options...
DiggerUK Posted August 5, 2009 Share Posted August 5, 2009 If Goldman Sachs were to link up with Microsoft/Yahoo, and that conglomerate got into partnership with Peter Mandelson, even the Four Horsemen of the Apocalypse would run and hide. AI and the evil one, enough to scare anyone. Quote Link to comment Share on other sites More sharing options...
RufflesTheGuineaPig Posted August 5, 2009 Share Posted August 5, 2009 what are the odds? Pretty good when your superfast computers get to see what's happening in the market a few hundreths of a second before everyone else. In fact, it's pretty hard to lose. You can just sit back and suck the smaller investors dry without any risk. Quote Link to comment Share on other sites More sharing options...
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