You Lose

In case you were an investor during the past few years, I think this is worth your paying attention.

Sometimes it appears that the bankers at Goldman Sachs (NYSE: GS) are much smarter than their counterparts elsewhere. Now, there is some fresh evidence that that is true. The firm bet that securities backed by risky home loans would drop in value. According to The Wall Street Journal, taking that position "generated nearly $4 billion of profits during the year ended Nov. 30." The paper says that a small number of bankers in a very small division of the bank made most of the investment that lead to the gain.

Clearly, the group did not share the information with many of the firm's clients, who gambled in the opposite direction and lost.

Investors have to wonder whether the people at Goldman drink different water or breathe different air. The investment bank is the only company in it peer group to have a stock that is up for the year. It has never been in any danger. One of its hedge funds, Global Alpha, did poorly and lost a great deal of money, but the rest of the firm was not affected.

As I have been working in the financial community, I was very aware that the housing boom was going to burst, and have been very conservative. I am interested to know, did you know too that the subprime mortgages were coming to the fore, and did you act accordingly?

As many of my posts were about this, I am also interested to know; did you get any warnings of those I posted?