“Blow-Out” Earnings Of Goldman Sachs: From Clients’ Accounts To Their Pockets

Goldman Sachs (GS) reported quarterly earnings yesterday. The information you received from mainstream media was from the GS Exhibit 99.1 news release. You ought to have read the 8-K SEC filing and ignored the media.

http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=6840…

Did you know that “The information furnished pursuant to this Item 2.02 (Results of Operations and Financial Condition), including Exhibit 99.1 (Press Release), shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of Group Inc. under the Securities Act of 1933 or the Exchange Act”.

Did you know that the GS net revenue from trading stocks, bonds, currencies and commodities was $7.836 billion in the 3Q2009. As total net revenue was $10.03 billion, this figure does not include income from investment banking, lending, commissions, principal investments, etc. The 3Q2009 had 64 trading days, so the net revenues from trading were $122.44 million per day. That revenue, however, was AFTER they paid their traders their base compensation and bonuses, which were much greater than the reported net revenue.

Although the equities market is not a zero sum game, most of the income GS made from trading was in fact from zero-sum contracts, which means, as there is one winner and one loser, the public and GS clients had the other side of the trade and were the losers.

Now, if GS reported gross revenues from trading, not net, and split out the trading from zero-sum contracts, I think the public would be absolutely shocked over the amount of wealth transferred from their accounts to GS and for the most part into the pockets of the GS traders. Even the shareholders are getting screwed.

Anybody who says the capital market is a level playing field has rocks for brains.

Something to think about when the CNBC and Bloomberg news desk anchors are telling you about the “blow-out” earnings of Goldman Sachs.

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