Go long GS because GS will be taking the contrarian position on every market that can no longer be leveraged higher and every commodity that has been out of favor or held down.
So go long GS ? sure, as it will take the other side of everything now leveraged into bubble status. posted 8-1-07
from Message 23753107
That, my friends, leads me to Goldman’s third quarter earnings release today. Earnings were up an eye-popping 88% from last year. It was as though Goldman was on the right side of every trade.
But how could this be? We saw the headlines;
‘Goldman's Exclusive Hedge Fund Drops By 10%’
‘Goldman hedge fund falls 22.5 pct in Aug’
Well, you see, Goldman doesn’t manage OTHER peoples money quite like it manages it’s own.
From the report - Asset Management (money they manage for others), Goldman: “Asset Management net revenues were $1.20 billion, 31% higher than the third quarter of 2006, reflecting a 40% increase in management and other fees, partially offset by lower incentive fees.”
Lower incentive fees? Fees were down 52% from last year. Incentive fees reflect doing a good job. Looks like their performance was lacking from last year.
Goldman: “During the quarter, assets under management increased $38 billion to $796 billion, reflecting money market net inflows of $31 billion, non-money market net inflows of $19 billion spread across all asset classes, and net market depreciation of $12 billion, reflecting depreciation in equity and alternative investment assets, partially offset by appreciation in fixed income assets.”
Increase of $38 billion. That’s a lot of money but still just 5% increase. But with $38 billion in net inflows after depreciation it appears that they had negative organic return on the assets that manage.
All on all, the money they manage for OTHERS had a bad quarter.
Now look at their proprietary trading unit – THEIR money. Trading and Principal Investments were $8.23 billion, 70% higher than the third quarter of 2006. Equity trading revenues were up a mind boggling 154%. This is in quarter were we saw a rough drop of about 3% in the S&P500.
Goldman: “Significant losses on non-prime loans and securities were more than offset by gains on short mortgage positions.”
They shorted mortgage positions with THEIR money!
OTHER peoples money (OTM); NEW YORK, Sept 13 (Reuters) – “Goldman Sachs Group's Global Alpha hedge fund fell 22.5 percent in August on losses from currency and stock trades, Bloomberg News reported, citing an update sent to investors.”
Goldman has the largest collection of hedge funds in the world. How is it that they receive 75% of their revenues from trading, but the hedge funds they manage for other people’s money under-perform the returns Goldman receives on its OWN money? When Goldman’s hedge funds are long sub-prime, why did not the shorting of mortgages strategy that they used for THEIR money save some of the OTHER people’s money? Trading is a zero sum gain. Did Goldman need someone to take the other side of the trade?
from: Message 23899710
It seems GS is using its own clients money to take the other side of its trades. How 'bout that sportsfans! |
