Let’s talk about Goldman Sachs. As a young man in college, I had the opportunity to co-op with this company, but turned it down because I had no interest in living in New York City. At that time in my life, I didn’t know a stock from a money market account. I was studying for my Master’s Degree in Computer Science and that’s all I knew. I remember talking to a very attractive lady who was telling me all about the company. She then mentioned moving to New York. I told her, “Your sign here says you have opportunities worldwide.” She responded, “But our opportunities for you are in New York.” I lost interest after hearing that. If I knew then what I know about Goldman Sachs now, I would have jumped at the opportunity. The company is incredible.
However, the company has some very questionable practices. How is it that less than a year ago, the company was in such dire straights that it had to borrow money from the government? Now, the company has just reported robust net earnings of $3.4 billion for the second quarter, soon after repaying a $10 billion bailout received from the U.S. Treasury's Troubled Asset Relief Program. Hmm……. And it gets even better….
The firm set aside $6.65 billion in the quarter for compensation expenses, adding to a firestorm of criticism about pay practices on Wall Street. So far this year Goldman has set aside $11.3 billion for compensation. This is a lot of money for a company that just needed a bailout of us, the taxpayers. Hmm….. and there’s more….
“The turnaround for Goldman, though, largely resulted from its trading desks, which produced 46 days of more than $100 million in trading revenue during the second quarter, according to the filing. Trading losses were reported on only two days.” Guys, nobody is this good. This brings me back to the following story that appeared a few weeks ago. It was about a guy who copied Goldman’s Sachs proprietary trading software to some other computer systems overseas.
Goldman wants to "put away" a criminal that has certainly eroded its trading advantage, and worse, made a fool of it. Goldman is even willing to have the prosecutor allege that the stolen advantage would be "unfair" in the wrong hands. In doing so, it acknowledged the possession and creation of an advantage that presumably would be unfair in the "right" hands. In seeking to condemn a THIEF, Goldman basically condemned ITSELF.
Maybe this is how they produced a 96% positive trading streak with their trades. Nobody is right on their trades 96% of the time and if they are, how did they ever get in a situation where they needed a government bailout.