Thursday, April 29, 2010

A Porfolio Piece? Not Yet

At first glance, you’d think that writing the annual report for a major investment bank would be a fun project.

But I don’t think whoever wrote the copy for Goldman Sachs’ latest annual report (PDF) is going to include it in their portfolio – at least not for awhile.

The copy is certainly well-written, but it just doesn’t seem to match reality. Here are a few examples.

I guess Tom Montag, a salesperson at Goldman Sachs didn’t get the memo. He sent an internal email on one of their products noting, “Boy that Timberwolf was one shitty deal.”

Normally I wouldn’t use the word “shitty” here, but if a United States Senator can use it during a public hearing, I guess it’s okay. Senator Carl Levin didn’t just use it once, he used the term 12 times in less than 5 minutes during a hearing this month. (that’s one “shitty” every 30 seconds!)

The Goldman Sachs executive who was charged with civil fraud, Fabrice Tourre had this to say in one of his internal emails:

“More and more leverage in the system, The whole building is about to collapse anytime now…Only potential survivor, the fabulous Fab[rice Tourre]…standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!”

Tourre doesn’t seem like a team player to me.

The copy in this section mentions “Goldman Sachs Gives, a donor-advised fund that makes grants to charitable organizations recommended by the firm and our participating managing directors.”

Wouldn’t surprise me if the donors in this “donor-advised” fund are also shorting a CSO (collateralized self-satisfaction obligation)—betting that the feelings of altruism plunge shortly after the donation.

Note to whoever wrote this annual report: It’s pretty good work – not shitty at all. But I wouldn’t put this in your portfolio – at least not for a year or so.

Posted by Richard Bloch

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