Wanna See What Kind of Crap Is In Some CDO's?

[PAPA ROACH]

This is some mind boggling shit here my friend. This whole read is quite good actually but pay attention to the employment number methodology and the CDO created by Merrill, fascinating.

http://www.frontlinethoughts.com/pdf/mwo010408.pdf

"“For Norma, [the manager] assembled $1.5 billion in investments. Most were not
actual securities, but derivatives linked to triple-B-rated mortgage securities. Called
credit default swaps, these derivatives worked like insurance policies on subprime
residential mortgage-backed securities or on the CDOs that held them"

They made CDO's that had no real hard assett's??? WTF?? packaged a derivative into a derivative and sold that. Run for the hills fast.

 

[Trader KGB]

Then there are the CDO-squared and CDO-cubed concoctions they came up with.. What a dog and pony show..

What I want to know is, how did Goldman Sachs as a firm avoid nearly all of this mess, yet their Global Alpha hedge fund ended '07 down 39%..?

http://money.cnn.com/news/newsfeeds/articles/djf500/200801061916DOWJONESDJONLINE000412_FORTUNE5.htm

 

[gwb-trading]

Quote from Trader KGB:

Then there are the CDO-squared and CDO-cubed concoctions they came up with.. What a dog and pony show..

What I want to know is, how did Goldman Sachs as a firm avoid nearly all of this mess, yet their Global Alpha hedge fund ended '07 down 39%..?

http://money.cnn.com/news/newsfeeds/articles/djf500/200801061916DOWJONESDJONLINE000412_FORTUNE5.htm

It is because the Global Alpha Hedge Fund is the customers' money, while the hedging at Goldman's against the mortgage market is their own money.

"So where are the customers' yachts?"

 

[Trader KGB]

Quote from gwb-trading:

It is because the Global Alpha Hedge Fund is the customers' money, while the hedging at Goldman's against the mortgage market is their own money.

"So where are the customers' yachts?"

Ah excellent point! I read about that before, just needed a refresher.

 

[$CostAverageMAN]

It is because the Global Alpha Hedge Fund is the customers' money, while the hedging at Goldman's against the mortgage market is their own money.

"So where are the customers' yachts?"

A straight up fleecing

 

[scriabinop23]

Quote from gwb-trading:

It is because the Global Alpha Hedge Fund is the customers' money, while the hedging at Goldman's against the mortgage market is their own money.

"So where are the customers' yachts?"

hehe..


here's the goldman trading strategy:

1) Start with 20B

2) Buy X asset in book A
3) Short X asset in book B

4) At the end of the Q, when its reporting time, the profitable book is owned by GS. The losing asset is in the GS hedge fund.

Very simple. Thats how you never lose.