What Is Goldman Sachs?
By John Carney - CNBC
One of the most striking things about Goldman Sachs earnings reports is that the firm pretends it doesn't trade at all. Yet it derives about half of its income from things that many people would consider trading.The phrases market making and customer facilitation, however, conceal the fact that these things involve a lot of trading. And not just trading in response to customer orders. You see, Goldman doesn't wait for a customer to place an order for a financial product before it takes a position in a product. It facilitates customers by anticipating customer order flow. That is to say, it buys and sells financial assets that it expects its clients will want to buy or sell in the future.
For years now, Goldman has banished the word trading from its lexicon. You won't find the word in its earnings reports. Officially, the firm just doesn't having trading units at all. Instead they have "market markers" who are supposedly focused on facilitating customer business. And other folks who make "principal transactions," which means making longer term investments with Goldman's money.
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