Monday, August 13, 2007

Goldman's GEO Quant Fund

GEO Global Equities Opportunities Fund is down over 30%. What do you do next? Just what Goldman did. But first let's rename it. I have a suggestion.

Goldman's Egregious Opportunity Fund.

Since you've already sold billions of stock and bonds in the fund, the prices of the assets are already crushed. It looks "prudent" because you've decreased the leverage from 8X to 3.5X, but you've sold without regard to price. Now put in $3 billion of new money, with $2 billion from the firm, and another billion from your billionaire clients, at these depressed prices in the Global Equity Opportunities Fund. Now you get all the upside on the rebound, without suffering the losses your strategy caused.

And you look like a gentleman.