Goldman Sachs Has First Perfect Quarter With Zero Trading Loss

How does this prove that GS doesn't have an unfair advantage? If anything... it proves the opposite

hahahahaha. i mean, come on. obviously they have an unfair advantage. a PERFECT quarter?

HAhahaha Wow, that's amazing.

Here were the comparable stats for MS.

The trading results during the first quarter handily beat results from longtime rival Morgan Stanley (MS), which said it lost as much as $30 million daily on four days during the quarter. Morgan Stanley made between $60 million and $90 million on each of 16 days during the quarter, and between $210 million and $240 million on one day.

Brett Philbin contributed to this story from New York.

-By Joe Bel Bruno, Dow Jones Newswires; 212-416-2469; joe.belbrunoATdowjones.com

How can you equate success in trading to having an unfair advantage? I don't work for GS but I tip my hat to the traders that do; good for them and I hope they keep busting their ass to make the money that they do.

Of course they have an advantage. They have an army of research analysts, access to a world of information, access to the LATEST information down to the millisecond, the smartest traders, and they are able to execute trades with amazing timing.

The question is, who do they have an advantage over? Over the average American? Yep. Over other banks? Maybe, but I'd be careful about making that assertion. Now, is that advantage unfair? Surely we can't expect the average American to be able to trade as efficiently as GS...

Should I start buying calls on GS? Surely they'll start recovering from that 20% loss sometime soon??

According to the FT, JP had a perfect first quarter too.

what convenient timing LOL. The really trying to stick it to the SEC

How is daily trading revenue determined? Is this daily profit coming from capital gains from trading within their trading unit before paying out salaries, bonuses, admin, overhead, etc..?

So does JPMorgan.

Suck it Lloyd!

I haven't been following the trading world very closely this past quarter, but is there any chance that Goldman's impressive returns were due, in large part, to the market being a bit more predictable and possibly less volatile? I understand that the market is inherently unpredictable, but does anyone think that with the current trend of the gov't assisting the economy that maybe it became much more likely for certain outcomes to occur. Thus giving traders at GS as well as other BBs a bit of a leg up this quarter as opposed to previous quarters? Or was this epic zero loss trading just a demonstration of pure dominance?

It seems JP's trading was even stronger than Goldman's:

http://dealbook.blogs.nytimes.com/2010/05/11/jpmorgan-matches-goldmans-…-trading-quarter/

JP's average DAILY trading revenue was 118 M. Couldnt find comparable figures for GS but seems that GS was about the same, maybe a little weaker.

Its becoming clearer to me everyday that JPM and GS are now the top banks on the street in almost every category, with MS, CS, and elite boutiques lagging behind. Does anyone else feel this way?

Soldier1... if your going to base your evaluation on this alone.. then you'd better put Citigroup and BAML ahead of everyone too:

http://www.nytimes.com/2010/05/12/business/12bank.html

The count is now 4 banks who had a perfect quarter

This is going to be big trouble, just wait and see. These politicians are going to go fucking bizerkus. WHY in god's name would you disclose something like this? You're reporting your earnings and sources of such earnings, there's no reason IMO why something like this would/should have to be disclosed unless congress/SEC explicitly asks.

In a world where popular sentiment is that the Wall Street is a fixed game for the benefit of a few greedy fat cats, this doesn't bode well for our case of free markets, promotion of capitalism, transparency, serving clients, etc...

A second question is, exactly why is this possible? Four shops completely independent of each other perform flawlessly? Was there one particular instrument that did so well that it offset any downswings to smooth out any daily runs into the red? Did markets perform in the first quarter in a way that made it easy to read and anticipate? Was there an absence of market anomalies which allowed for more efficient trading of trends? Was there an unprecedented lack of noise in the markets that made trading unusually easy?

Regardless of the answer, and I'm eager to hear your theories, congress is going to go ape shit with this. They're not concerned with the facts/reality. They concerned with what they can sensationalize, get behind and use as ammunition... so come election time they can stake the claim that they were instrumental in bringing greedy Wall Streeter's to justice.

FX Trader: im obviously not basing that judgement purely on trading results and am considering JP's performance in the league tables as well as in recruiting. Also, BAML and Citi's revenue does not come close to exceeding 100M a day.

I interned in S&T at a BB last summer and they wouldn't stop talking about how JP was killing it in trading, maybe things have changed since then...

you should look at it on a IRR or ROIC basis. JPM might have made more money (I didn't see that), but for all we know they put 2x as much capital at risk.

leveRAGE.:

what are you fucking retarded? this was almost 2 fucking years ago. If you haven't noticed, most S&T divisions are under the axe right now because of shit performance.

shut your fucking mouth if you don't know what you are talking about and just want to bring up 2 year old threads that are entirely meaningless now to promote your liberal bullshit

Someone needs to get laid.... seriously dude, calm down. I acknowledged that my response was extremely late you shit head. Now why don't you tell me how 4 firms posted 63/63 profitable days without a rigged system, since clearly you know what you're talking about...

If you have hundreds or thousands of traders, each with a small edge, once you net out their positions the overall book will make money pretty consistently (especially if the traders are uncorrelated). It's not complicated, just make sure you understand the law of large numbers.

It's also important to remember that this was a quarter when bid/asks were still pretty wide and volume was starting to pick up again. Not hard to make money running a book as a market maker that way. The conditions were pretty ideal for the few remaining big boys to profit as folks returned to the market. Obviously this can't (and didn't) last forever, and to cite this as evidence of some kind grand conspiracy is pretty ridiculous.

I work at the equities proprietary desk of a large bank (outside the US) and yes, FX and rates traders do have some competitive advantage (some may call unfair) even when compared to hedge funds and asset managers: they can see the client flow and even the asset and liability management flow (which is quite significant sometimes).

Unfortunately, there are regulator rules so that we can't see equities flow at our brokerage house so my desk does not have any advantage like this. Equities prop desk in a bank is just like an ordinary long/short equity hedge fund, but our only client is the bank.

Do you guys realize that the trading divisions mainly handle client orders, i.e. they act as an intermediary and don't take much of a position in the market? Every time a transaction is done they are protected by the bid-ask spread and they can be profitable based on the spread alone. That does not take any genius. Of course they have a prop trading desk and they usually have net long positions due to the inventory they sell. But this is where it gets interesting. A lot of people claim: Markets go up, markets go down - we always make money. That's simply wrong. The trading desks suck when the market goes down and they outperform when the market rallies - as was the case last quarter.

There sure is a mismatch. I'm just saying that the bid/ask spread (especially if it is as large as it is now) provides some good protection.

By the way I haven't been on the trading floor, I'm an IBD/MBB guy. I'm just talking about the stuff people told me / I have read. So I would be more than happy if somebody can provide more insight.

But I think my main point - that most people think banks are making bets on their own - is just wrong. If the average Joe could buy low and sell high, he would have a good chance of having a perfect quarter, too.