Clients Lose Big on Goldman's 2010 Advice

Bank profited all last quarter, but its trading tips have stunk
By Kevin Spak,  Newser Staff
Posted May 19, 2010 7:31 AM CDT
Clients Lose Big on Goldman's 2010 Advice
Goldman Sachs CEO Lloyd Blankfein waits to testify before the Senate Subcommittee on Investigations, April 27, 2010.   (AP Photo/Susan Walsh)

Goldman Sachs made money on trading every single day last quarter, but anybody following its advice wasn't so lucky. Seven of Goldman's nine “recommended top trades for 2010” have been money-losing duds, Bloomberg reports, with the worst of them dropping as much as 14%. “This says that Goldman's guys are only human,” says one investment executive. “No one is always right.”

So how is Goldman making so much money if it's so wrong? Goldman's COO says that it makes most of the money by capturing bid-offer spreads when it acts as intermediaries for its clients, and that proprietary trading accounts for only a small part of its earnings. Henry Blodget has another theory. Goldman's analysts did a lot better last year, incidentally: nine of their 11 top trades panned out. (Read more Goldman Sachs stories.)

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