It’s official. Four big Wall Street banks pitched perfect games last quarter.
The trading departments of Bank of America, Goldman Sachs, JPMorgan Chase and Citigroup each finished the first quarter of this year having made money every single day. According to their SEC filings, their traders did not lose a single penny on a single day the whole quarter. For 61 days in a row. All four of them. Really.
Now I haven’t determined the actual probability of that occurring in a truly free market, but I’m going to guess that it’s indistinguishable from 0.0000. That is, there is zero chance these guys are really that good. (See TARP, 2008.)
But when you’re acting like some kind of emerging market oligopoly, screwing over your own clients and letting computers trade for you, apparently it is just that easy. And as I’ve said before, investors beware. These big banks are lousy businesses. They have no sustainable moats. After all, it wasn’t one bank but four of them that just threw perfect games.
There’s more in this article from the NY Times – although it inexplicably fails to raise the question, “How exactly did this occur?”
This gentleman’s quote pretty much summed it up:
“This is just, as we call it, milking the market and your captive client base.”
Exactly, dear sir. This has nothing to do with talent or being a steward of wealth.
Unbelievable, isn’t it?
“Citigroup is investigating a rumor that one of its traders entered a trade that helped precipitate a drop of almost 1,000 points in the Dow Jones Industrial Average, a spokesman for the bank said on Thursday.”
Developing story. More here. But I’m afraid I’m just not buying the “dumb trader” excuse. It’s not like he mistakenly added an extra zero before hitting the return key. More likely, if there was indeed an error, the odds seem high that it would be related to high frequency trading.
Ah, Wall Street. Don’t be so afraid to be competent!
And wasn’t there a movie about this sort of thing?
I suppose this may explain why it took 3 years for the SEC to file its suit against Goldman.
$TNDM This is the comp the mkt worries about? Peerless can't seem to raise VC $, more discounts & use credit lines...? http://bit.ly/bQo0Fd 2 days ago
