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11/17/2011

If You Want to Work As a Trader, It’s a Lot Less Clear Than It Used to Be That You Should Be Working at Goldman Sachs


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EfinancialCareers

It used to be clear that Goldman was the place to be if you’re a trader.

Now it’s not.

Goldman’s traders continued to make some of the biggest money in the third quarter. However, they also made losses on more days than rivals.

The 10Q submissions of Goldman Sachs, Bank of America and Morgan Stanley paint a predictable picture of worsening conditions, increasing trading losses and erratic profitability.

On one measure, Goldman Sachs’ traders were far more successful than the rest: they made profits in excess of $50 million on 27 days in the third quarter and profits in excess of $100 million on nine days. By comparison, Morgan Stanley’s traders made revenues in excess of $50 million on only nine days in the three months to September. Despite what was ostensibly a disastrous trading quarter at Bank of America Merrill Lynch (BofA/ML), BofA/ML’s traders did comparatively well—they made revenues of $50 million on 13 days last quarter.

However, it’s the losses that stand out. BofA/ML’s traders shot themselves in the foot with losses of more than $100 million on two days. It's not clear how much higher than $100 million these losses were, but the implication is—a lot. Overall, Goldman’s traders made losses on 28 days; Morgan Stanley’s on 26 days. Not long ago, the same banks were making trading losses on no days in a quarter.

So, if you’re a trader, where should you aspire to work if you want to work in a big bank? J.P. Morgan is generally thought to be the new hot ticket.

J.P. Morgan didn’t break out trading performance for the third quarter, but it does show trading performance for the first six and nine months. This suggests it made losses on around 15 days in the third quarter and profits more than $60 million on around 23 days. The gap between J.P. Morgan and Goldman Sachs has narrowed—in J.P. Morgan’s favor.

Days of Positive and Negative Trading Revenues in the Third Quarter

Bank of America:

No days with more than $100m
1 day with $75m-100m
12 days with $50m-$75m
17 days with $25m-$50m
14 days with $0-$25m
4 days with -$50m to -$25m
2 days with more than -$100m

Morgan Stanley:
2 days with more than $100m
1 day with $75m-$100m
6 days with $50m-$75m
10 days with $25m-$50m
9 days with $0-$25m
9 days with $-25m to $0
7 days with $-50m to -$25m
4 days with $-75m to -$50m
3 days with $-75m to -$100m
1 day with $-125m to -$100m
1 day with $-125m to -$150m
1 day with more than -$150m

Goldman Sachs:
9 days with more than $100m
9 days with $75m-$100m
8 days with $50m-$75m
10 days with $25m-$50m
7 days with $0-$25m
8 days with -$25m to $0
8 days with -$25m to -$50m
1 day with -$50m to -$75m
3 days with -$75m to -$100m
1 day with more than -$100m

–Sarah Butcher

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Comments

I'm curious. Why would these league rankings be relevant to any trader? Aren't traders compensated primarily based on their individual trader results? If so, the performance of their peers at Bank X should be irrelevant.

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