Goldman Sachs Hands Clients Losses, Eliza McNamara

Goldman Sachs Hands Clients Losses in Top Trades

http://www.ElizaMcNamara.com My source is http://www.bloomergs.com May 19 (Bloomberg) -- Goldman Sachs Group Inc. racked up trading profits for itself every day last quarter. Clients who followed the firms investment advice fared far worse.

http://www.businessweek.com/news/2010-05-19/goldman-sachs-hands-clients-losse...

Eliza McNamara says that Goldman Sachs handles top investors accounts and they are considered to be one of if not the best investment bank but there have been some scandals of late that are tarnishing their good name. Who knows if it is all true? There are always two sides to every story, the saga will continue for some time yet I'm sure.

http://en.wikipedia.org/wiki/Goldman_Sachs

Seven of the investment banks nine recommended top trades for 2010 have been money losers for investors who adopted the New York-based firms advice, according to data compiled by Bloomberg from a Goldman Sachs research note sent yesterday. Clients who used the tips lost 14 percent buying the Polish zloty versus the Japanese yen, 9.4 percent buying Chinese stocks in Hong Kong and 9.8 percent trading the British pound against the New Zealand dollar.
http://wallstreetblips.dailyradar.com/article/goldman-sachs-hands-clients-los...
The struggles for analysts at Goldman Sachs, which is fighting a fraud lawsuit from U.S. regulators who accuse the company of misleading investors in a mortgage-linked security, show the difficulty of predicting market movements as widening budget deficits, a fragile global economic recovery and tighter financial regulations increase volatility. Stock and currency fluctuations rose to the highest in a year this month as Europe pledged about $1 trillion to stop a debt crisis in the region.
This says that Goldmans guys are only human, said Axel Merk, who oversees $500 million as president and chief investment officer of Merk Investments LLC in Palo Alto, California. No one is always right. There are a lot of cross currents in this market.
Gia Moron, a spokeswoman for Goldman Sachs, declined to comment.
Chinas Bear Market
Goldman Sachss trading profits come from capturing bid- offer spreads when its traders act as intermediaries for clients, Gary Cohn, the firms president and chief operating officer, said last week in New York. Proprietary trading isnt a main driver of earnings, he said.
The trade advice for customers is distributed by Goldman Sachss global markets economic research group. It tracks the performance of the trades in a daily research note. The time period of the recommendations is 12 months.
Goldman Sachs analysts made eight trade recommendations for this year in December, including telling clients to buy the British pound against the New Zealand dollar. On April 1, Goldman Sachs added a ninth top trade, telling clients to buy Chinese stocks listed in Hong Kong and predicting the Hang Seng China Enterprises Index would rise 19 percent to 15,000.
Tough Analysis
Since then, the gauge has slid 9.4 percent to 11,426.18. The Shanghai Composite index has entered a bear market, losing about 21 percent this year. Thats the third biggest decline in the world after Greece and Cyprus. The decline accelerated this month on concern Greece, Spain and Portugal will struggle to finance their budget deficits and dismantle the euro.
The Chinese stock recommendation was made by a group led by Dominic Wilson, a senior Goldman Sachs economist in New York. Wilson cited inexpensive valuations and robust economic growth. He also said investors have already factored in the risk of higher interest rates in China.
Wilson wasnt available to comment because he was out of the office traveling, according to an e-mail.
Exit Calls
Emerging markets appear superior to the developed world, but the market isnt trading that relationship, said Eric Fine, who manages Van Eck Associates Corp.s G-175 Strategies emerging-market hedge fund. It may be that some assets are mispriced, but if the market starts to discount the end point of the game, such as the collapse of the euro, its not that mispriced.
http://sfgate.bloomberg.com/SFChronicle/Story?docId=1376-L2NGSS0YHQ0X-1
Analysts at Goldman Sachs recommended investors exit two trades in February, one involving interest-rate swap rates in the U.K. and another advising clients to buy credit-default swaps in Spain and sell similar contracts in Ireland. The first trade had a potential loss of 24 basis points and the other had a return of 2.9 percent, according to figures issued in the appendix of the research note in February.
Eliza McNamara has a keen interest in politics and is a self improvement expert. She has written five books on the topic and can be reached at http://www.ElizaMcNamara.com

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