7 ms·

Goldman Sachs Has First Perfect Quarter With Zero Trading Loss

35 points by px 16y ago

pwhelan 16y 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 16y 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/886982/000095012310046612/y84220y8422002.gif http://www.sec.gov/Archives/edgar/data/886982/00009501231004... (net revenues are in millions)
  - pwhelan 16y 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...
lutorm 16y ago
Not hard to get zero trading loss if the government bails you out when you lose... ;-)
- KonaB 16y ago
  Pavlovian anti-GS hysteria at its best...
  - lutorm 16y ago
    Note the visual indication of what's known as a "joke".
    - KonaB 16y ago
      The joke is no longer amusing. Everyone is attacking GS, from utterly clueless uneducated morons to utterly devious dumb politicians with a private agenda. By attacking GS in such a gratuitous manner, one reminds others of such tragicomedy.
      - borism 16y ago
        poor, poor, Goldman Sachs.
      - lutorm 16y ago
        From below: "They didn't have a single trading day in which they made less than $ 25 million" Anyone who makes more than 25M per day can take a little heckling, if you ask me.
        deleted 16y ago
        [deleted]
        fname 16y ago
        Even HN needs its share of clowns for public entertainment Well... you're hired!
        deleted 16y ago
        [deleted]
      - cwp 16y ago
        So everyone who criticizes Goldman is stupid? Is that by definition, or is there an intelligent critique out there that hasn't yet been made? What, if anything, would cause you to criticize Goldman? What, if anything would cause you to laugh at Goldman? These aren't sarcastic rhetorical questions, I really want to know. From where I'm standing, it seems that Wall Street is deeply corrupt, and Goldman's success comes from their unparalleled ability to turn that to their advantage. Reasonable and more knowledgeable people may disagree, and many do (eg, Warren Buffet). But I'm puzzled by those who get angry at the suggestion that Goldman in particular and Wall Street in general are anything less than paragons of virtue. Surely this is a legitimate topic for discussion. If these guys screw up we all suffer, and there are a lot of people suffering acutely right now. I'm wrong, fine. I'm willing to be educated. But I don't appreciate being dismissed as a moron.
borism 16y ago
"That Goldman Sachs is not a shitty deal"
marltod 16y 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.
- yummyfajitas 16y 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?
  - marltod 16y 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.
    - yummyfajitas 16y ago
      The bid of 9.99 will NOT get filled before the bid of 10, except under very special circumstances, even on separate exchanges. The exchange with the lower bid is required to route the trade to the exchange with the higher bid as a result of RegNMS. http://en.wikipedia.org/wiki/Regulation_NMS http://en.wikipedia.org/wiki/Regulation_NMS The only time this rule fails to apply is under extremely high latency scenarios. For example, last thurs when nasdaq left the machines on but NYSE switched to human matching, RegNMS was suspended.
  - borism 16y ago
    not very reliable source, i know, but try http://www.google.com/search?q=goldman+sachs+front+running http://www.google.com/search?q=goldman+sachs+front+running
moe 16y 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 16y 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 16y ago
    Yes same stated profit, but they pay half their revenues to their employees. Otherwise their profit would be far higher.
- deleted 16y ago
  [deleted]
- secret 16y 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.
- cturner 16y 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.)
- 16y ago
mikecane 16y ago
"...how is that possible that they only make money?”
- mikecane 16y 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.
  - jodrellblank 16y 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.
    - mikecane 16y ago
      OK, at least that explains why you did it. Thanks.
      - jodrellblank 16y ago
        It wasn't actually me originally, and that downvote wasn't me either! paranoia
AndrewDucker 16y 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.

35 points by px 16y 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 16y 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/886982/000095012310046612/y84220y8422002.gif http://www.sec.gov/Archives/edgar/data/886982/00009501231004... (net revenues are in millions)
- pwhelan 16y 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...

lutorm 16y ago

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

KonaB 16y ago
Pavlovian anti-GS hysteria at its best...
- lutorm 16y ago
  Note the visual indication of what's known as a "joke".
  - KonaB 16y ago
    The joke is no longer amusing. Everyone is attacking GS, from utterly clueless uneducated morons to utterly devious dumb politicians with a private agenda. By attacking GS in such a gratuitous manner, one reminds others of such tragicomedy.
    - borism 16y ago
      poor, poor, Goldman Sachs.
    - lutorm 16y ago
      From below: "They didn't have a single trading day in which they made less than $ 25 million" Anyone who makes more than 25M per day can take a little heckling, if you ask me.
      - deleted 16y ago
        [deleted]
        fname 16y ago
        Even HN needs its share of clowns for public entertainment Well... you're hired!
        deleted 16y ago
        [deleted]
    - cwp 16y ago
      So everyone who criticizes Goldman is stupid? Is that by definition, or is there an intelligent critique out there that hasn't yet been made? What, if anything, would cause you to criticize Goldman? What, if anything would cause you to laugh at Goldman? These aren't sarcastic rhetorical questions, I really want to know. From where I'm standing, it seems that Wall Street is deeply corrupt, and Goldman's success comes from their unparalleled ability to turn that to their advantage. Reasonable and more knowledgeable people may disagree, and many do (eg, Warren Buffet). But I'm puzzled by those who get angry at the suggestion that Goldman in particular and Wall Street in general are anything less than paragons of virtue. Surely this is a legitimate topic for discussion. If these guys screw up we all suffer, and there are a lot of people suffering acutely right now. I'm wrong, fine. I'm willing to be educated. But I don't appreciate being dismissed as a moron.

borism 16y ago

"That Goldman Sachs is not a shitty deal"

marltod 16y 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.

yummyfajitas 16y 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?
- marltod 16y 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.
  - yummyfajitas 16y ago
    The bid of 9.99 will NOT get filled before the bid of 10, except under very special circumstances, even on separate exchanges. The exchange with the lower bid is required to route the trade to the exchange with the higher bid as a result of RegNMS. http://en.wikipedia.org/wiki/Regulation_NMS http://en.wikipedia.org/wiki/Regulation_NMS The only time this rule fails to apply is under extremely high latency scenarios. For example, last thurs when nasdaq left the machines on but NYSE switched to human matching, RegNMS was suspended.
- borism 16y ago
  not very reliable source, i know, but try http://www.google.com/search?q=goldman+sachs+front+running http://www.google.com/search?q=goldman+sachs+front+running

moe 16y 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 16y 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 16y ago
  Yes same stated profit, but they pay half their revenues to their employees. Otherwise their profit would be far higher.
deleted 16y ago
[deleted]
secret 16y 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.
cturner 16y 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.)
16y ago

mikecane 16y ago

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

mikecane 16y 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.
- jodrellblank 16y 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.
  - mikecane 16y ago
    OK, at least that explains why you did it. Thanks.
    - jodrellblank 16y ago
      It wasn't actually me originally, and that downvote wasn't me either! paranoia

AndrewDucker 16y 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.