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?
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Goldman Sachs Has First Perfect Quarter With Zero Trading Loss
21–30 of 62 posts
Re: Goldman Sachs Has First Perfect Quarter With Zero Trading Loss
#22What 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?
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.
Re: Goldman Sachs Has First Perfect Quarter With Zero Trading Loss
#23What 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?
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.)
Re: Goldman Sachs Has First Perfect Quarter With Zero Trading Loss
#24Earlier quoted context omitted.
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…
Thanks for the intelligent comment. Finally! I am not against intelligent critique of GS, the government, whatever. In fact, such critique is required to ensure the proper functioning of the system, closing the feedback loop and providing the required checks. What I am against is Pavlovian unintelligent critique, and one sees a lot of that when the topic is Wall Street. And even though a lot of HN'ers are deeply know…
The only way of taming these hyper-motivated people is by eliminating all economic freedom, and I oppose that on ideological grounds
speaking of ideology, the premise of Free Market is that government and society at least try to prevent fraud.
I'm myself not sure that GS is fraud, but maybe that's how their business of front-running and "intelligent market-making" will be defined by their former clients and society in few years from now.
Re: Goldman Sachs Has First Perfect Quarter With Zero Trading Loss
#25What 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?
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)
Re: Goldman Sachs Has First Perfect Quarter With Zero Trading Loss
#26Front-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.
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?
Re: Goldman Sachs Has First Perfect Quarter With Zero Trading Loss
#27Front-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.
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.,…
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.
Re: Goldman Sachs Has First Perfect Quarter With Zero Trading Loss
#28Front-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.
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.,…
not very reliable source, i know, but try
Re: Goldman Sachs Has First Perfect Quarter With Zero Trading Loss
#29Earlier quoted context omitted.
Note the visual indication of what's known as a "joke".
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.
> Everyone is attacking GS, from utterly clueless uneducated morons to utterly devious dumb politicians with a private agenda.
The above assumes that all attacks are baseless.
The SEC charges appear to be trumped up but GS was a major beneficiary of the AIG bailout. GS should lose money when it's counter-party risk assessment is wrong, as it was in the AIG case.
Re: Goldman Sachs Has First Perfect Quarter With Zero Trading Loss
#30Earlier quoted context omitted.
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.,…
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.
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
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.