THE Goldman Sachs Thread (merged)

[128shot]

Well, I'm glad I work there.

[Zardoz]

Well, I'm glad I work there.

I'm sure you are. I wish I did.

Just curious: How many hours do you work in an average week?

[jupiters_release]

Have a friend who works at GS, only 26 years old, low down on the pole, making $160K/year but constantly working.

[Zardoz]

Yes, I really do wish I worked for Goldman Sachs:

Corks popping on Wall Street

At Goldman Sachs Group Inc., employees will earn an average of $622,000 this year, thanks to record profit of $9.4 billion.

That's the average for the whole outfit, including secretaries, clerks, assistants, new hires, etc.???

Oh, my...

The outsize paychecks are a reflection of a boom in takeover activity and a robust stock market, which translate to bigger profits for investment banks and stock brokerages.

Even so, "it's hard to wrap your mind around these numbers," said Ed Durkin, director of corporate governance for the United Brotherhood of Carpenters and Joiners of America.

[lateStarter]

What are all these guys (and gals) doing with their bonuses? I saw another related headline where the top knob at Morgan Stanley was getting a $48 million bonus... I actually hope they are splurging on Maserati's and houses in Bali. Maybe they are just re-investing their digital 1's and 0's in more of the same...

I know what I'd be doing with it...

[Micki]

Article in SeekingAlpha suggests that the recent reweighting in Goldman Sachs energy index could be the result of plummeting production.
i.e. the algorithm used to calculate the commodity index is automatically adjusted down with falling production thus effectively hiding the possible fact that oil production has peaked.

SeekingAlpha The article also contains an interesting link to G/S site describing how the commodity index is weighted.

[DantesPeak]

Interesting story. I posted the NY Post story about the GS realignment of commodity indexes the other day.

It appears that GS and maybe some others large brokers are using the downward momentum from the new weightings to panic the market lower. They appear to have succeeded.

Business media sees what has happened to the price of oil, and says it is due to rising inventories, and doesn't even look at he manipulations behind the scenes. But the complete opposite inventory story is true - US oil/product inventories fell 70 million barrels in the fourth quarter. The IEA doesn't have its 2006 figures yet, but previously stated the OECD countries would lose 200 million barrels in the six month period from October to March. They may be revising that inventory drop to a higher number based on what we see in the US, combined with downturns in OPEC, Russia, and Mexico oil production levels.

[seahorse]

Very interesting. If GS ties the weightings of their investments to production, maybe this is an early indicator of peak oil. The GS information certainly explains the recent drop in oil prices, which, classic supply/demand balance can't explain.

[MrBill]

The GSCI cuts its weighting in crude products when the switch from HU to RBOB took place. It roughly cut its weighting in half due to the conversion. I think 174.000 contracts, but I am not sure? That number just sticks in my head.

In any case, we have not hit peak oil production, yet. Global demand is approximately 85 mbpd and the supply cushion is about 2.5 mbpd in 2007 up from 1-2 mbpd in 2005-06, which is causing rising inventories and spot prices to plummet. Forcing OPEC producers to cut production or face further gluts.

Also resource nationalization that results in under investment in oil producing assets and infrastructure in places like Mexico, Venezuela, Bolivia and Russia may equally be to blame for any below 'potential' production shortfalls. Of course, with prices falling at the moment that may not be an immediate problem, but in the long run it will matter a lot.

For example using natural gas to desalinate seawater in the desert is not a very intelligent policy, but also selling gasoline domestically for as little as 10 cents a litre does little to encourage conservation.

The DBC factsheet also gives some information that should be of no surprise to the commodity index investor. The performance table shows 1 year returns as of September 30, 2006 of 9.32% for the DB Commodity Index, (minus) -21.14% for the GSCI and -6.11% for the DJ-AIG Commodity Index.

Is Commodity ETF Slicing and Dicing Necessary?

Since September crude prices are a lot lower. A lot. Hurting GSCI 'long only' index, which is 70% weighted in energy!

GS has been one of the most bullish houses on the street and have been forced to cut their price forecasts for crude twice already this year in response to falling prices. I guess they are mere mortals afterall?

[oilluber]

does anyone have any info on this, why the energy component
of the index was reduced last week and the subsequent crash of
oil futures ??

I don't have any facts on this.... anyone ??

any cause and effect here ??

The energy bulls have had their heads severed in just 2 weeks.

[seahorse]

"I find your lack of faith disturbing."

Darth Vader

[oilluber]

"I find your lack of faith disturbing."

Darth Vader

referring to what ??
the GS people and the US government ??

[DantesPeak]

oiluber: check this out:

Wither the Oil Price

[TreebeardsUncle]

Hi.
The speculators are bailing, led by the big institutional investors, because anticipated gains have not antipated largely due to the lack of an intense hurricance season, a warm winter, and a relaxing of geopolitical tensions. In fact oil prices are about where they were a year ago. Expect their to be a good buying opportunity soon. Still think that investing in oil rig servicing companies is the way to go.

[NEOPO]

Goldman Sachs





and as of 1/11/2007:
Goldman Sachs Commodity Index (GSCI®)

about 1/3 the way down.

Energy 67.58%
Crude Oil 32.16
Brent Crude Oil 14.06
RBOB Gas 1.64
Heating Oil 6.51
GasOil 4.72
Natural Gas 8.50

[seldom_seen]

Two words: volatility.

Ok that's just one word, yet oil is the single most important commodity of industrial civilization. A civilization predicated on stability, predictability and control. When oil prices bust out of their cage and start running in all different directions like a chimpanzee on angel dust. It's not a good sign.

Oil may go down to 40 and be up at 90 within the next six months?
That's an economical earthquake.

[NEOPO]

AUGUST 2005 - ENERGY 77.51%

Thats 10% in 16 months.
I am having a hard time finding anything earlier then 2005.
This is the same place that holds Cheney's money in Vangaurd funds.

[Micki]

The topic is also discussed here:
G/S reweighting result of PO(?)
That thread is based on an article suggesting that the reweighting is the result of dropping production.
It does have a link to GS page where you can find out more.

[Dreamtwister]

If the big players like G&S suspected that there were a "significant number" of contracts that would not be delivered over the next... let's say 2 years, wouldn't that be a good reason to bail before those contracts were violated?

I know *I* wouldn't want to be stuck holding a worthless piece of paper come the delivery date. If I had reason to believe there would be no delivery, I'd be reducing my energy holdings as fast as humanly possible.

Just a thought.

[Dreamtwister]

Blatant crosspost to follow:

If the big players like G&S suspected that there were a "significant number" of contracts that would not be delivered over the next... let's say 2 years, wouldn't that be a good reason to bail before those contracts were violated?

I know *I* wouldn't want to be stuck holding a worthless piece of paper come the delivery date. If I had reason to believe there would be no delivery, I'd be reducing my energy holdings as fast as humanly possible.

Just a thought.