06:57 ET GS Goldman Sachs making riskier bets - WSJ (74.53) The Wall Street Journal reports that GS has increasingly grown more dependent for its profits on aggressive traders betting with the firm's cash; proprietary trading in a wide range of investments now could account for 25% or more of GS's income before taxes, analysts estimate, and is a bigger proportion than the historical percentage at GS and a larger share than the 5-20% that is typical of proprietary trading at rival firms; some senior people worry that it may be time to exercise more caution.
More evidence that these investment firms operate for their profits at the cost of their customers. More evidence that the industry is getting more and more desperate. As for traders here, do not miss this opportunity to get incorporated. Where should I forward my resume and trading records to GS? Anyone has a referee for me?
It can be more profitable. The goal is to minimize drawdowns and make flat periods shorter by adding short term trading to existing stocks & bonds portfolios. A quote from "A Questions & Answers Report Regarding Managed Futures Accounts By the Chicago Mercantile Exchange, Inc." http://www.autumngold.com/CTASelect/Content.htm : "Harvard Business School Professor John E. Lintner found that including managed futures in a portfolio "reduces volatility while enhancing return." And that such portfolios "have substantially less risk at every possible level of return than portfolios of stocks, or stocks and bonds." Risk is the issue that Motley Fool's article about buy and hold approach ( http://www.fool.com/School/BuyandHold.htm ) doesn't address at all.
What's funny is that GS trades short term for its account while selling the buy and hold approach to their clients in the asset mgmt division. If that's what the clients want...
One of the big brokerages headed by Ace Greenberg.... "We had a meeting every Monday morning. Our in-house traders, trading house money, had to explain any losers they were holding in the meeting. After a while, everybody closed out all losers before the meeting so there wasn't anything to explain. Saved us a fortune."