The subprime trading gains notched by Messrs. Birnbaum and Swenson and their Goldman associates are large by recent Wall Street standards. Traders at Deutsche Bank AG and Morgan Stanley also bet against the subprime-mortgage market this year, but in each case, their gains were essentially wiped out because their firms underestimated how far the markets would fall. New York hedge-fund company Paulson & Co. also turned a considerable profit on the subprime meltdown this year, as did Hayman Capital Partners, a Dallas-based hedge-fund firm, say people familiar with the matter.So it wasn't all analysts who missed the subprime mess - only the stupid, biased or corrupt ones did.
Friday, December 14, 2007
Goldman makes $11 billion shorting mortgage industry
The other day I wrote about a Washington Post story on how analysts missed the housing meltdown. One financial house, Goldman Sachs, however, actually made their biggest profit ever off of shorting the mortgage industry. A number of other brokerages bet against the housing bubble and won, too, according to the Wall Street Journal: