Tuesday, September 1, 2009

Barry Ritholtz on Goldman

Is Goldman Sachs Trustworthy?

Alt title: Econ Smackdown: Paul Tudor Jones vs Goldman Sachs

Goldman may (or may not) have top notch analysts and an excellent research department. But given their history of saying and selling one thing and then doing another, can anyone trust what comes from them?

Should hedge funds be setting their Outlook to auto-delete anything from GS.com research department? How can you tell what is a real research report versus disinformation or some bizarre Psy-ops strategy?

All of this raises the more basic question: Can their clients trust what GS generates, when they don’t know if they are a) trading the opposite side of the report for their own accounts; or b) HFT front running ?

The question isn’t whether Goldman Sachs is Taibbi’sgreat vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

It is much more simple than that — the more relevant question is “Can Goldman Sachs be trusted by their own clients ?”

Bloomberg excerpt:

“Paul Tudor Jones, the billionaire hedge-fund manager who outperformed peers last year, is wagering that Goldman Sachs Group Inc. and Morgan Stanley got it wrong in declaring the start of an economic recovery.

Jones’s Tudor Investment Corp., Clarium Capital Management LLC and Horseman Capital Management Ltd. are taking a bearish stand as U.S. stock and bond prices rise, saying that record government spending may be forestalling another slowdown and market selloff. The firms oversee a combined $15 billion in so- called macro funds, which seek to profit from economic trends by trading stocks, bonds, currencies and commodities.”

I am curious if anyone has any related thoughts on the matter . . . ?


Anonymous said...

Crap what should I do with FACT

Anonymous said...

I don't think Goldman can be trusted. They are deepcapture on a higher level, getting away with things due to their ownership of gov't and media but all things eventually come to an end. Will they fold up tomorrow? Probably not but the clock is ticking.

Politicians sensing election failure may just throw those crooks under the bus.

Anonymous said...

Is GCI still a buy?

Anonymous said...

uh-oh, bulls, sqeeze your butt chicks...

Anonymous said...

GCI rally, much like AIG rally is over

Anonymous said...


burntout said...

The take home message for a simpleton like me was this: The stock market was and always will be rigged to favor the house, which is big banks/investment banks. They became so bold that they bet their ass over CDS/SIV crap and would have been begging on the streets last year. They blackmailed their politico buddies/used threats about economy crashing and were given 25 B to short the commodities market last year. They made out like bandits. They furthur created panic this year and made stock market keel over and bought at the march lows

Remember Obama and Geithner saying that the economy and stock market will do better AND it did better due to newly created dollars rushing in by POMOs from NY fed and HFT.

My feeling is if the stock market crashes, these a-holes will be lined up on the streets and summary judgement passed on to them by the collected mobs.

So help me God. I have bet the house.I bought calls on UPRO,AIG,SQNM,SPPI,XPP,GSK. And just to insure myself against black swan ( these develish critters have been pesky from time to time), I bought physical gold

Anonymous said...

I agree with burntout, the whole capitalism / free market / stock market system as we know it (or thought we knew it) is gone. Gone forever.
No justice has been served to anyone who brought the market to its knee's - AIG, GS, the naked short sellers, the SEC for sitting with their fist up there a… , the rating agencies, it’s all been a huge fraud. & to put the cheery on top, the government bails out the culprits. It’s absolutely disgusting and demoralizing, and I’m actually very surprised there hasn’t been a backlash from you US citizens / investors. Everyone is being lied to! Add up all the bail outs and you get a number over $10T not the $750B as advertised. Up here in Canada I just sit and watch the BS debate on “health care” when really the gov should really be upholding the law of “fraudulent connivance” and should be whacking people in jail. I guess the lesson here is securities fraud isn’t really fraud if you have enough money to pay your way out of trouble. Kind of scary actually.

It has however taught me the importance of technical analysis and that the impossible, is possible (read 5 standard deviations at crash). I enjoy reading this blog, its got a lot of great insight. Keep it up.

As for Government Sachs, I’ll let Manna continue to take his shots, he’s good at it.


Anonymous said...

uh-oh, SP just violated your touted "reverse 666" aka 999 support, doh!

Anonymous said...

We had great economic news and we sold off!

I think the sole purpose of the market is to frustrate you!!

Anonymous said...

Is this a rhetorical question? Of course GS can't be trusted. "Wall Street" has done some very good things for our country over the centuries but it is also allowed to operate in a "legalized organized crime" fashion. Don't expect anyting else and you won't be disappointed. As the saying goes on Wall Street, "We'll take our experience and your money and make it your experience and our money." Goldman is simply king of this hill. Their number may be coming up, though, as I wouldn't like all the bad press attention.


By the way, where'd you go? You're awfully quiet in the midst of this raging market turmoil. Which way do you think we are heading? What about Citibank?

Palmoni said...

I think C bottom today It went from 4:30 to 4:57 in the first 20 minutes, and then traded a billion shares

Anonymous said...

Thanks for the comment on C. I'm curious if you have looked at the real total number of C shares out there? If you take Bloomberg’s 11.3b and add to it the 7.7b USG shares you get 19b total shares. At $5 that comes to $95b. That's more than GS. More over, C's 10-Q (June 30), p 9, shows that they have issued 17,372,000,000 new shares following the conversion, making a combined 22,879,716,974 shares outstanding. If that's correct, then the market cap at $5 a share is around $114 billion. Do you see this purely as a trading play because of the way the stock is moving, or do you see some other value-based justification for future moves up?

Love the site. Thanks!

Palmoni said...

Your analysis on C is spot on; but when will the Govt. shares be included in the "trading" pool.

And that's where the difference lies.

They have a much greater invested interest for things to be higher in the stock market, than blowing out their piece of C in the market--especially since C hasn't cleaned up the toxix stuff on their books--but they'll want people to think that it is getting better!

That's something further down the road, that will have to be looked at, but not now.