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Hunt For The World’s Most Dangerous Squid!

  • Written by Syndicated Publisher 51 Comments51 Comments Comments
    November 10, 2011

    Bloomberg reports Goldman Traders Lost Money 21 Days in 3Q:

    Goldman Sachs Group Inc. (GS), which relied on trading for 62 percent of revenue so far this year, recorded losses from that business on 21 days in the third quarter, the most since the fourth quarter of 2008.

    The firm’s traders lost more than $100 million on one of the days, according to the New York-based company’s quarterly filing with the Securities and Exchange Commission. They produced more than $100 million on nine days out of 64 total days in the quarter that ended Sept. 30, the filing showed.

    Well, you guys know where I stand on this, and I have warned you ad nauseum…the Squid Can’t Trade!

    thumb_image001_copyLearning to fly with tentacles instead of wings may prove difficult for the Squid!

    Note: Subscribers can download the GS 3rd quarter review with the updated valuation opinion hereicon Goldman Sachs Q3 update Final (482.35 kB 2011-11-03 03:03:51)

    In our Goldman Sachs update note, “Show me how to trade” (August 2011), we challenged Goldman Sachs’ ability to create alpha. Besides Goldman’s apparent lack of skill in generating returns in downward markets, we also presented an analysis on how its share price is driven by momentum (equity markets) instead of the commonly accepted metric of book value. Those who would have followed the traditional school of thought (sell side) by bidding the price up instead of down would have seen their capital erode by 9%; the stock is down 9% since our most recent publication. Below are some of the extracts from our previous note alongside updated charts including Q3 results to peruse before we delve further into the quarterly results the BoomBustBlog way.

    Bloomberg also reports Goldman Has $2.3B ‘Funded’ Credit Exposure to Italy which is probably why they are also reporting Goldman Sachs Said to Raise $1.1 Billion From ICBC Stake Sale. Bascially, it’s time to rasie some capital. After all, BoomBustBlogger subscribers saw this coming 4 months ago.

    As excerpted from Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To Be Ignored?

    So, what is the logical conclusion? More phallic looking charts of blatant, unbridled, and from a realistic perspective, unhedged RISK starring none other than Goldman Sachs…

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    And to think, many thought that JPM exposure vs World GDP chart was provocative. I query thee, exactly how will GS put a real workable hedge, a counterparty risk mitigating prophylactic if you will, over that big green stalk that is representative of Total Credit Exposure to Risk Based Capital? Short answer, Goldman may very well be to big for a counterparty condom. If that’s truly the case, all of you pretty, brand name Goldman counterparties out there (and yes, there are a lot of y’all – GS really gets around), expect to get burned at the culmination of that French banking party I’ve been talking about for the last few quarters. Oh yeah, that perpetually printing clinic also known as the Federal Reserve just might be running a little low on that cheap liquidity antibiotic… Just giving y’all a heads up ahead of time…

    image009image009

    There’s plenty more where that came from….

    I’m Hunting Big Game Today: The Squid On A Spear Tip

    I demonstrate how the market, the sell side, and most investors are missing one of the biggest bastions of risk in the US investment banking industry. I will also…

    Hunting the Squid Part 3: Reggie Middleton Serves Up Fried Calamari From Raw Squid

    Hunting the Squid, part 4: So, What Else Can Go Wrong With Goldman Sachs? Plenty!

    Hunting the Squid, Part 5: Sometimes Your Local Superhero Doesn’t Look Like What They Show You In The Movies

    Images: Flickr (licence/attribution)

    About The Author

    Reggie Middleton is an entrepreneurial investor who guides a small team of independent analysts to uncover truths, seldom if, ever published in the mainstream media or Wall Street analysts reports. Since the inception of his BoomBustBlog, he has established an outstanding track record
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