Wednesday, December 5, 2007

Goldman Sach’s – Who would’ve guessed it!

Goldman's glory may be short-lived

Big investment banks run advisory, securities and investment businesses but keep them walled off from each other to avoid conflicts of interest and trading on inside information. Goldman has been more aggressive than any other bank in putting the three together - it often advises a company on a transaction, finances it and invests its own money. Interesting Article.. Any comments please.

Posted by stevie dee @ 09:51 PM (629 views)
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8 thoughts on “Goldman Sach’s – Who would’ve guessed it!

  • Golman’s strategy – i agree with trade 1, am opposite trade 2 comments on over
    is GS trying to appease fears in the banking system? who would bet aginst them? maybe it’s time …

    Global Viewpoint No: 07/33 – Introducing Our 2008 Top Ten Trades
    November 28, 2007
    The current choppy market conditions present even greater challenges than usual for those wishing to express macro-driven risk positions in the financial markets. Nevertheless, we believe that a number of investment ‘themes’ likely to play out over the coming year are worthwhile pursuing right away.

    We present below the first five of our Top Ten trades for 2008. As in previous years, we plan to add to this list as new opportunities arise in the months ahead. We also proffer a number of ideas that have not made it to the top list (because we are awaiting confirmation either in the macro data or the price action)—but that we are monitoring closely.

    As readers will recognize, the overall risk profile of such a portfolio of trades does not have a strong directional ‘tilt’, but rather plays on the notion of macro relative value convergence. As Jim O’Neill discussed in the latest issue of the Global Economics Weekly, our strongest conviction is that activity growth in main economic areas will ‘re-synch’ over the next four-six quarters. But the overall pace of the global expansion is probably as uncertain now as it has been over the past three-four years.

    We plan to review our Top Ten Trades for 2007, together with our tactical trades, in a forthcoming note. We hope to build on our track record in 2008 – and wish you all the best of luck in your own search for excess returns.

    TRADE #1: Go long a basket of MYR, SGD and TWD, funded in US$, to express the theme of higher retail price inflation in South East Asia. EXPECTED TOTAL RETURN: +5%

    TRADE #2: Go short GBP/JPY, in order to capitalize on a slowdown in the UK economy amid higher risk aversion. EXPECTED TOTAL RETURN: +7
    TRADE #3: Go short Gold (in US$), in anticipation of a gradual reduction in the risk premium on bank credit (and benefit from a stabilization in the US$). EXPECTED RETURN: +15-20%

    TRADE #4: Go long a basket of BRL, RUB and CZK funded in CAD, GBP and US$, in equal parts, to bank on continued ‘globalization’ combined with greater discrimination on external balances. EXPECTED RETURN: +7%

    TRADE #5: Go short 10-yr C$ bond futures vs. receiving CHF 10-yr swaps, to play the interest rate ‘recoupling’ between North America and Europe with a valuation tailwind. EXPECTED RETURN: around 40bp of spread widening

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  • sorry, agree with trade 2, disagree with trade 3 …doh !

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  • Thecrashiscomingbaby says:

    Goldman’s is probably bust or in severe difficulty but has managed to hide its problems under a web of fancy financial modeling – it has been done before and it takes a while for people to discover it. Also, if you are in an easy money environment, you may be effectively close to insolvent and yet manage to keep functioning because finance is easy to raise.

    Here is an interesting insight on a serious anomaly in Goldman’s asset valuation:

    We shall find out in due course Im sure.

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  • as a trader myself(personal)…I am amazed that people don’t realise that the city is awash with insider trading,passing of sensitive information,
    recommending stocks then bailing out of them etc etc…….

    fsa do absoultely nothing at all…..wonder why that is

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  • Taffee – as someone who works in the City, I say that it isn’t and if you do have any allegations to make, make them to the FSA rather than libelling the country’s largest industry.

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  • Oh, Come on James, “if you do have any allegations to make, make them to the FSA “, the FSA’s credability is shot, one example, self-cert mortgages, people losing houses, that’s why you are here, to read the disbelief of others as to what is actually going on.

    Please spare me the “foilhat brigade” comment. A lot of foil is used in the City, and is isn’t for making hats!

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  • I am not a City worker and probably think more like the average Joe on this subject. Whether there was illegal insider information or not at GS might never be proved in court but at least it there should be an enquiry. There are too many people’s homes and lives at stake. Banks seem to have got carried away with writing credit derivatives “because they could”. This seems like an honest mistake since they are now losing money. It stinks that GS actually isn’t losing on this. If the investment arm of the company is independent and separated by a “chinese wall” then it should be called a different company and separated, in my opinion.

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  • Dohousescrashinthewoods says:

    Anyone remember Arthur Andersen?

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