Goldman Sachs Has First Perfect Quarter With Zero Trading Loss

http://www.bloomberg.com/apps/news?pid=20601087&sid=aHRgsfzJINXw&pos=5

by px • 16 years ago

35 55 16 years ago

pwhelan2• 16 years ago

Impressive feat. I guess that stat arb and whatnot is easier now because people are no longer leveraged to move the world and the margins can be a bit tighter. I would be interested to see loss days compared to a quarter of total gain/loss.

px• 16 years ago

They didn't have a single trading day in which they made less than $ 25 million. And they had 35 days over $100 million.

http://www.sec.gov/Archives/edgar/data/886982/00009501231004...

(net revenues are in millions)

pwhelan2• 16 years ago

I guess I wasn't clear. I mean compared to other quarters where they (or other firms) made similar or greater amounts of money. Is the constant winning a side product of less risky bets, less leveraged & more fearful markets or...?

What is it about this particular time that has allowed them to do so well? (and where can I get me summa that!) I guess we won't know since we don't work there...

lutorm3• 16 years ago

Not hard to get zero trading loss if the government bails you out when you lose... ;-)

KonaB5• 16 years ago

Pavlovian anti-GS hysteria at its best...

lutorm3• 16 years ago

Note the visual indication of what's known as a "joke".

borism5• 16 years ago

"That Goldman Sachs is not a shitty deal"

marltod3• 16 years ago

Front-Running is currently a legal tactic in trading. GS seems to be very efficient at it. And the 1/8th point higher you have to pay when you buy a stock isn't that much anyways.

yummyfajitas7• 16 years ago

This is complete nonsense.

Front running your client's trades is completely illegal. Front running on an exchange is not even possible unless you hack the exchange computers (also illegal). The first person to place an order at a given price on a given exchange wins.

The only sort of front running which is legal is guessing ahead of time what a third party might do and placing orders before they actually do it. I.e., you might guess that Apple plans to buy Yahoo and buy Yahoo shares in anticipation of this event. Do you have evidence GS has done this?

marltod3• 16 years ago

There is more than one exchange. If you see a Bid of 10$ come up on the NYSE you can put in a bid of 9.99 on another exchange and if that order gets filled you can then turn around and try to match that bid of $10 on the NYSE if you are fast enough.

borism5• 16 years ago

not very reliable source, i know, but try

http://www.google.com/search?q=goldman+sachs+front+running

pocoloco• 16 years ago

While front running may be illegal it seems that is possible to do front running if you’re properly placed in the stock exchanges. Max Keiser and Hellen Brown discuss this in the video [1] regarding how this can be done by “specialist brokers.”

For good measure read also Hellen’s article [2].

[1] http://www.youtube.com/watch?v=V5G7zBWMpIs&feature=playe...

[2] http://www.huffingtonpost.com/ellen-brown/stock-market-colla...

codexon5• 16 years ago

http://seekingalpha.com/article/150397-flash-trading-goldman...

cturner3• 16 years ago

This comment and the upvotes demonstrate the problems with financial stuff in this forum.

Go to the wikipedia page for front-running. The first sentence says that it's illegal. The first sentence. And indeed it is. Thus, it's quite a claim to say that GS make money from it.

Marltod, where did you get all this from?

marltod3• 16 years ago

http://dealbook.blogs.nytimes.com/2010/01/12/goldman-executi...

moe• 16 years ago

What value does GS provide in return for those $25MM?

My underlying question would be: Are they a symptom of a systemic flaw (basically a parasite) or does their role in the financial ecosystem somehow justify that kind of profits?

martythemaniak• 16 years ago

It should be noted it's $25 million profit per day for 63 days, or $1.575 Billion for the quarter. To put it in perspective, that's not very far from Google's quarterly profit (~1.9B)

cellis• 16 years ago

Yes same stated profit, but they pay half their revenues to their employees. Otherwise their profit would be far higher.

secret• 16 years ago

Theoretically, they are finding inefficiencies in the market and eliminating them through a better allocation of capital (and of course profiting from the effort).This is the role of any trader/speculator in a market. Some will be right in their analysis, others wrong, and all known information gets reflected in an asset price. Not having a single down day an an entire quarter basically means that at the end of each day the aggregate of their bets were on the winning side. Given the presumed stochastic nature over small time frames of the markets, that's quite a feat. That said, given the other headlines they've made recently,I strongly emphasize the first word of this reply.

cturner3• 16 years ago

A lot of the money they make is on high-speed passive market-making, and they value of this is far tighter spreads on stocks. Compare spreads on the NYSE now to twenty years ago. (Moe, we have to stop meeting like this.)

paulitex• 16 years ago

Liquidity, mostly.

They are 'market makers'. If you're a big {pension, real estate, rrsp}fund and want to make a trade, say a purchase, you need to call your trader directly. The trader will sell you some of their own (if they have it on their books), or will contact other people who they think may have extra supply on your behalf.

They are the 'grease of the economy'. In theory, it makes markets run smoother, which leads to greater efficiencies for everyone, and makes the world a better place.

(in theory)

mixmax• 16 years ago

The thing is that it goes both ways. The liquidity that they provide can just as quickly be pulled back as we saw during the Lehman collapse. I'm not sure it provides value.

arijo• 16 years ago

Someone has to create the wealth that supports liquidity.

mikecane3• 16 years ago

"...how is that possible that they only make money?”

mikecane3• 16 years ago

Now wait one minute here. That quote was from the post itself. That someone down-voted it leads me to suspect GS has trolls here. Stop it.

jodrellblank2• 16 years ago

I always downvote comments on HN where someone just posts a quote from the linked article and nothing else.

I don't just vote on whether I agree or disagree, I vote on whether I want more comments like that on HN, and I don't want more people quoting the linked articles without adding anything. If I want to read the linked article, I know where to find it.

AndrewDucker• 16 years ago

This means they aren't taking enough risks.

Seriously - the stock market is risk based. If you aren't taking risks then you're not going to be in those areas that make the most money. Sure, you want to make more than you lose, but if you never lose any money then you aren't taking enough risks to really strike it big by finding something nobody else thought would produce good returns.

Goldman Sachs Has First Perfect Quarter With Zero Trading Loss

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