Goldman Sachs Has First Perfect Quarter With Zero Trading Loss

Post by marltod » Mon, May 10, 2010, 6:22 PM UTC

cturner wrote: post #32

marltod wrote: post #13

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.

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?

Post by arijo » Mon, May 10, 2010, 6:27 PM UTC

paulitex wrote: post #25

moe wrote: post #15

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?

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…

Post by cturner » Mon, May 10, 2010, 6:42 PM UTC

arijo wrote: post #44

paulitex wrote: post #25

Earlier quoted context omitted.

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…

Someone has to create the wealth that supports liquidity.

Post by mikecane » Mon, May 10, 2010, 6:48 PM UTC

jodrellblank wrote: post #41

mikecane wrote: post #36

Earlier quoted context omitted.

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.

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.

Post by yummyfajitas » Mon, May 10, 2010, 7:09 PM UTC

pocoloco wrote: post #43

yummyfajitas wrote: post #26

Earlier 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.,…

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-col…