Goldman Hedge Fund takes it on the chin

ok, so basically you all saying thye worked their model on the price of an asset moving around, up and down....

but they were counting on fair value of the asset being X

but now that the whole market has found out that the value of the asset is nowhere near what they all thought, there is no way the asset is ever going to be worth X again?


so they are screwed?
 
Not screwed yet at least. LTCM failed because they were out of capital to meet additional calls. Goldman, Tudor, Caxton are just down right now. They could go up, down, or sideways from here...time will tell.

:D

Quote from jasonjm:

ok, so basically you all saying thye worked their model on the price of an asset moving around, up and down....

but they were counting on fair value of the asset being X

but now that the whole market has found out that the value of the asset is nowhere near what they all thought, there is no way the asset is ever going to be worth X again?


so they are screwed?
More...
 
What these 'geniuses' fail to understand is that, all their sophisticated phd-designed portfolio selection models do, is to extrapolate the past into the future.

I think they were overweight on small caps, trying to exploit the historical small caps long run outperformance, but guess what happens when the small caps/blue chips spread goes to the floor.

Plotting the spread $rut / $spx weekly, its fall since april 2006 it's the worst since 2000.

Will it 'revert to the mean'?
 
Quote from buzzy2:

What these 'geniuses' fail to understand is that, all their sophisticated phd-designed portfolio selection models do, is to extrapolate the past into the future.

I think they were overweight on small caps, trying to exploit the historical small caps long run outperformance, but guess what happens when the small caps/blue chips spread goes to the floor.

Plotting the spread $rut / $spx weekly, its fall since april 2006 it's the worst since 2000.

Will it 'revert to the mean'?
More...

Hey buzzy2, are you critisizing my colleagues from Goldman ??! My "egghead" colleagues with all these PHD´s gracing their surnames ? Don´t you think you owe them a little bit more R E S P E C T ?? I mean, come on, at least they are not blowing off like AMARANTH, SOWOOD, BEAR STEARNS CDO hedge funds...

My prayers are with them...Come on $rut/ $spx spread...revert to the mean...my colleagues from GS are in trouble...if you are in trouble=> double... :D :D :D
 
I think they're done. GS Global Alpha and other copycats are getting blown out on that spread. There are forced liquidations going on in small caps that are incredibly powerful. The only reason is for this is redemptions. My guess is this is the end of global alpha and Mark Carhart as well as a couple other well known funds.
 
JASONJM my posting was a "tongue in cheek" joke.

The plain english explanation is that the VAR models used by the highly paid and highly educated analysts at GS failed and the value of the Global Alpha hedge fund when marked to market is underwater.
 
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