6 ms·

Goldman Sachs loses money on just one trading day in Q3

14 points by yan 17y ago

infynyxx 17y ago
They are bunch of shits manipulating entire market. They truly are "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money" [http://www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine http://www.rollingstone.com/politics/story/29127316/the_grea...]
deleted 17y ago
[deleted]
tamas 17y ago
I haven't lost any money on investments in 3 years, and I'm nowhere near being an educated economist. With a diversified portfolio, I could always find an equity to sell above the buying price when I needed money, and this way I could ride out the bear markets without realizing losses. Of course I'm nowhere near Goldman Sachs in volume (about 6 trades a month on average), just telling that it is actually possible to achieve a "perfect score". I know Goldman Sachs is not really popular right now among the people, and I have absolutely no intention to defend them, but this seems a bit like a witch hunt.
- Shamiq 17y ago
  Interest rate adjusted?
- biznerd 17y ago
  This is not a very good analogy. * You are one individual that averages 6 trades in month . GS has hundreds of traders, many of which do average that amount in a week (if not a day). The law of averages applies to GS, while your experience is anecdotal evidence. In fact, if after 3 years with an average of 6 monthly trades you haven't liquidated a single negative position I'd say that most probably are making a classic investment mistake - holding onto your losses too long. * GS trades much more volatile investments than you - futures, derivatives, etc. Traders have a much shorter time-horizon than you as well. You sell when you need the money while they're trying to meet their quarterly numbers.
  - tamas 17y ago
    Wow, apparently I expressed my point poorly, as you guys seem to pick up that I'm advertising how awesome I am and how I kick GS' ass on the markets. What I wanted to say is that it's hard to find an index that went down during Q3 so those hundreds of traders could actually manage to not lose money but only one day, so that post and the comments really seem to be... subjective and biased. As your note of my "strategy" being a mistake, I'm actually fine with my results and I'll keep going long, thank you.
    - loganfrederick 17y ago
      You make a good point about comparing their performance to the index. If the market as a whole is rising, and there are always other people willing to take the opposite position of you (or Goldman), it is conceivable that you could only have one negative day. If this was during a negative quarter for the market as a whole, that'd be a different story. Like the other poster noted, the likelihood that Goldman would consistently be on the positive side of millions of trades for ninety days is probably pretty slim.
- nandemo 17y ago
  Er, that's not the same thing at all. They're talking about daily P/L. They realize profit and loss every day. You can't simply ignore all the days when you had (unrealized) losses and still compare with situation described in the article.
  - dschobel 17y ago
    How are they not the same thing but at different time scales? So maybe GS realizes some loss every day, but surely they hold some positions on longer time frames. They don't wipe the slate after every day.
    - nandemo 17y ago
      Yeah, it's the same thing at very different time scales. In other words, the standard deviation for 3-year returns is much lower than the daily standard deviation. You can get a positive return in 3 years without being especially good or lucky. But getting a positive return every single day for 3 months is extremely unlikely.
      - mistermann 17y ago
        Unlikely if you don't have a direct pipeline into the white house and federal reserve. http://finance.yahoo.com/news/Wall-Street-speed-dial-gets-apf-3283001415.html?x=0 http://finance.yahoo.com/news/Wall-Street-speed-dial-gets-ap...
- deleted 17y ago
  [deleted]
biznerd 17y ago
Goldman serves as a "prime broker" to many hedge funds. Not to mention intimate financial relationships with the largest corporations in the world. It would be naive to think that it did not have any advantage because of its position in the financial industry. Having only one losing trading day in a quarter could not be accomplished without insider information.
- andylei 17y ago
  actually, it's entirely possible. i know of prop trading groups that have been around for ten years with only one or two down months. in dislocated markets, making markets is actually relatively easy, so it's not that surprising that they usually don't lose money. they also have hundreds of traders. each one of them probably had many losing days, but in aggregate, they have good traders and systems, so they rarely have losing days now. also, how do you know that it's impossible without insider information? what reason do you have to back up your claim?
  - mynameishere 17y ago
    they also have hundreds of traders Most of this is from computers trading >billion shares per day.
  - biznerd 17y ago
    months, yes this is possible. But only one day, that comes to almost a perfect score. And no one else has a perfect score. GS has turned into a giant hedge fund. And their numbers are consistently better than any other fund or investor. Better than Warren Buffet or George Soros. They're impossibly good.
- cynicalkane 17y ago
  Almost all large short-term trading desks make a conscious choice to insulate themselves from directional price changes. Either with delta-netural strategies--strategies where reasonable changes in price don't make a difference--or just by having a mix of favorable bets in all different directions, so that the majority of them going sour is unlikely. I know traders who think that many price moves in the market are due to insider trading they're not privy to. Since every trader, to my knowledge, seems to think this--even the ones at big investment banks--it's hard to say whether it's superstition or not, but it doesn't stop them from being profitable with only "outsider information".
ivenkys 17y ago
The article doesn't go into any details and that site is pretty well known for its negative coverage of GS but the wide connections of GS to the Financial Authorities and with other large companies is quite well known. Anyone who thinks that there is nothing at least slightly illegal in the way GS does prop trading is naive at best.
dmillar 17y ago
Did he watch the market over the past 3 months? It's been doing a pretty steady incline. If you got in low, it's been really hard to not make money. Goldman is getting vilified in the press these days, and I frankly think it's unwarranted. People who have little understanding of how they make their money quickly cry foul. Hanlon's razor applies here: Never attribute to malice that which can be adequately explained by stupidity.
- anamax 17y ago
  > Goldman is getting vilified in the press these days, and I frankly think it's unwarranted. Oh really? Goldman made a lot of deals with AIG and bought "insurance" from folks who didn't have the ability to pay off. When things went south, Goldman went to the US govt and said "pay off AIG's debts", saving Goldman the trouble and risk of going after the folks it bought insurance from. What part of that do you disagree with? Do you really think that pointing it out is unwarranted? Or are you going with "it was good"? > People who have little understanding of how they make their money quickly cry foul. I have no objection to them making money by being smarter or creating markets. I do think that they should take their losses like everyone else. If they buy "insurance" and it can't pay off, that's their problem. People who have little understanding of how they make their money quickly cry foul.
  - andylei 17y ago
    why would you blame goldman sachs for this stuff? if you were in this position, you would also lobby the government in the same way. you should be angry at the government for caving. this is also completely unrelated to the topic, that they've only had one down trading day in the last quarter. this most recent quarter had nothing to do with government handouts.
    - pbz 17y ago
      Problem is they had us by the balls while they were asking "nicely" for money...
      - 17y ago
yan 17y ago
Another look: http://www.zerohedge.com/article/another-view-goldmans-trading-perfection-and-statistical-improbabilities http://www.zerohedge.com/article/another-view-goldmans-tradi...

14 points by yan 17y ago

They are bunch of shits manipulating entire market. They truly are "a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money" [http://www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine http://www.rollingstone.com/politics/story/29127316/the_grea...]

deleted 17y ago

[deleted]

tamas 17y ago

I haven't lost any money on investments in 3 years, and I'm nowhere near being an educated economist. With a diversified portfolio, I could always find an equity to sell above the buying price when I needed money, and this way I could ride out the bear markets without realizing losses. Of course I'm nowhere near Goldman Sachs in volume (about 6 trades a month on average), just telling that it is actually possible to achieve a "perfect score". I know Goldman Sachs is not really popular right now among the people, and I have absolutely no intention to defend them, but this seems a bit like a witch hunt.

Shamiq 17y ago
Interest rate adjusted?
biznerd 17y ago
This is not a very good analogy. * You are one individual that averages 6 trades in month . GS has hundreds of traders, many of which do average that amount in a week (if not a day). The law of averages applies to GS, while your experience is anecdotal evidence. In fact, if after 3 years with an average of 6 monthly trades you haven't liquidated a single negative position I'd say that most probably are making a classic investment mistake - holding onto your losses too long. * GS trades much more volatile investments than you - futures, derivatives, etc. Traders have a much shorter time-horizon than you as well. You sell when you need the money while they're trying to meet their quarterly numbers.
- tamas 17y ago
  Wow, apparently I expressed my point poorly, as you guys seem to pick up that I'm advertising how awesome I am and how I kick GS' ass on the markets. What I wanted to say is that it's hard to find an index that went down during Q3 so those hundreds of traders could actually manage to not lose money but only one day, so that post and the comments really seem to be... subjective and biased. As your note of my "strategy" being a mistake, I'm actually fine with my results and I'll keep going long, thank you.
  - loganfrederick 17y ago
    You make a good point about comparing their performance to the index. If the market as a whole is rising, and there are always other people willing to take the opposite position of you (or Goldman), it is conceivable that you could only have one negative day. If this was during a negative quarter for the market as a whole, that'd be a different story. Like the other poster noted, the likelihood that Goldman would consistently be on the positive side of millions of trades for ninety days is probably pretty slim.
nandemo 17y ago
Er, that's not the same thing at all. They're talking about daily P/L. They realize profit and loss every day. You can't simply ignore all the days when you had (unrealized) losses and still compare with situation described in the article.
- dschobel 17y ago
  How are they not the same thing but at different time scales? So maybe GS realizes some loss every day, but surely they hold some positions on longer time frames. They don't wipe the slate after every day.
  - nandemo 17y ago
    Yeah, it's the same thing at very different time scales. In other words, the standard deviation for 3-year returns is much lower than the daily standard deviation. You can get a positive return in 3 years without being especially good or lucky. But getting a positive return every single day for 3 months is extremely unlikely.
    - mistermann 17y ago
      Unlikely if you don't have a direct pipeline into the white house and federal reserve. http://finance.yahoo.com/news/Wall-Street-speed-dial-gets-apf-3283001415.html?x=0 http://finance.yahoo.com/news/Wall-Street-speed-dial-gets-ap...
deleted 17y ago
[deleted]

biznerd 17y ago

Goldman serves as a "prime broker" to many hedge funds. Not to mention intimate financial relationships with the largest corporations in the world. It would be naive to think that it did not have any advantage because of its position in the financial industry. Having only one losing trading day in a quarter could not be accomplished without insider information.

andylei 17y ago
actually, it's entirely possible. i know of prop trading groups that have been around for ten years with only one or two down months. in dislocated markets, making markets is actually relatively easy, so it's not that surprising that they usually don't lose money. they also have hundreds of traders. each one of them probably had many losing days, but in aggregate, they have good traders and systems, so they rarely have losing days now. also, how do you know that it's impossible without insider information? what reason do you have to back up your claim?
- mynameishere 17y ago
  they also have hundreds of traders Most of this is from computers trading >billion shares per day.
- biznerd 17y ago
  months, yes this is possible. But only one day, that comes to almost a perfect score. And no one else has a perfect score. GS has turned into a giant hedge fund. And their numbers are consistently better than any other fund or investor. Better than Warren Buffet or George Soros. They're impossibly good.
cynicalkane 17y ago
Almost all large short-term trading desks make a conscious choice to insulate themselves from directional price changes. Either with delta-netural strategies--strategies where reasonable changes in price don't make a difference--or just by having a mix of favorable bets in all different directions, so that the majority of them going sour is unlikely. I know traders who think that many price moves in the market are due to insider trading they're not privy to. Since every trader, to my knowledge, seems to think this--even the ones at big investment banks--it's hard to say whether it's superstition or not, but it doesn't stop them from being profitable with only "outsider information".

ivenkys 17y ago

The article doesn't go into any details and that site is pretty well known for its negative coverage of GS but the wide connections of GS to the Financial Authorities and with other large companies is quite well known. Anyone who thinks that there is nothing at least slightly illegal in the way GS does prop trading is naive at best.

dmillar 17y ago

Did he watch the market over the past 3 months? It's been doing a pretty steady incline. If you got in low, it's been really hard to not make money. Goldman is getting vilified in the press these days, and I frankly think it's unwarranted. People who have little understanding of how they make their money quickly cry foul. Hanlon's razor applies here: Never attribute to malice that which can be adequately explained by stupidity.

anamax 17y ago
> Goldman is getting vilified in the press these days, and I frankly think it's unwarranted. Oh really? Goldman made a lot of deals with AIG and bought "insurance" from folks who didn't have the ability to pay off. When things went south, Goldman went to the US govt and said "pay off AIG's debts", saving Goldman the trouble and risk of going after the folks it bought insurance from. What part of that do you disagree with? Do you really think that pointing it out is unwarranted? Or are you going with "it was good"? > People who have little understanding of how they make their money quickly cry foul. I have no objection to them making money by being smarter or creating markets. I do think that they should take their losses like everyone else. If they buy "insurance" and it can't pay off, that's their problem. People who have little understanding of how they make their money quickly cry foul.
- andylei 17y ago
  why would you blame goldman sachs for this stuff? if you were in this position, you would also lobby the government in the same way. you should be angry at the government for caving. this is also completely unrelated to the topic, that they've only had one down trading day in the last quarter. this most recent quarter had nothing to do with government handouts.
  - pbz 17y ago
    Problem is they had us by the balls while they were asking "nicely" for money...
    - 17y ago

yan 17y ago

Another look: http://www.zerohedge.com/article/another-view-goldmans-trading-perfection-and-statistical-improbabilities http://www.zerohedge.com/article/another-view-goldmans-tradi...