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Posted by on Feb 23, 2010 in Business, Markets, TG Roundup

Goldman Disects Hedge Fund Holdings

There is a valid place for the financial sector in the economy. But it should be the cart pulled by a horse called manufacturing economy. Not the other way round as it has been in the last 7 to 10 years. In other words, the economic activity has to be based on production and sale of goods, i.e. physical goods. To certain extent, a product dominated economy with some service component (a la car wash centers, hair-cutting saloons)  is also healthy. A heavy reliance on service economy is very unhealthy. Where does trading stocks for a living in terms of economic value to the society? I would say, its value to the  society – if  anything, is negative.

The very existence of the hedge funds is for the sole purpose of finding a greater fool to sell the securities they bought. A mushrooming growth in hedge funds, though legal, is a societal ill. What’s worse is that a giant hedge fund is disguised as  an investment bank, no, no, now  as a bank with FDIC insurance. It’s name is Goldman Sachs. The nice philanthropic folks at Goldman put out a research piece on the activities and holdings of hedge funds.

The following is a comment on that Goldman piece by Tyler Durden of Zero Hedge (a blog I regularly follow) [If you have any stock market interest, you must follow Tyler and his Zero Hedge blog]:

If you are one of the unlucky few forced to buy and sell stocks for a living, based on some sort of “analysis”, be it fundamental, technical, lunar, sun-spot, haruspicate, or on any other divination of the future, you have our condolences. That said, should you find yourself in this sad predicament, more than anything you probably want to know if what you are buying (having made the decision to buy it, or heaven forbid, short) is the right stock based on what other BSDs, aka hedge funds are buying, i.e., if the name you have shorted has 95% short interest and is about to go up by 10,000% overnight after yet another Goldman “conviction buy” upgrade-based short squeeze, if hedge fund groupthink momo cliques are about to bail en masse from the latest and greatest “sliced bread” stock, and many other such considerations. Well, you are in luck, Goldman’s David Kostin has just released his quarterly hedge fund trend monitor, and it is chock-full of tens of charts of valuable information.

He pretty much republished most of that  Goldman’s research. If you are into stock market, you may want to print that Goldman’s research screen shots and look for long and short ideas.

1 Comment

  1. Mohan garu,thank you. I will get my hands on them.