Thought some of you might find this article on financial services firms interesting:

From The Economist

Investment banks
Coining it

Dec 20th 2006
From Economist.com

American securities firms have had a bumper year


IT HAS been a year to make even Croesus blush for the big Wall Street securities firms. Goldman Sachs, Bear Stearns, Morgan Stanley and Lehman Brothers have all announced record profits and beaten analysts’ expectations in the process. Bloomberg, a financial-information firm, calculates that the industry will make $29.1 billion after tax in fiscal 2006, a 43% rise on last year, which was itself a bumper one. New York’s tabloids have had a field day, splashing headlines like “Sachs of Loot” and fantasising about all the things outsized bonuses could buy.

Goldman, the best performer, is setting aside an unprecedented $16.5 billion to reward its talent, equal to $620,000 per employee across the firm. But it is now so profitable that the ratio of pay to revenue has actually fallen, to 43.7%, well below the 50% seen as a ceiling in the industry. And on Tuesday November 19th Goldman revealed that the bank’s boss, Lloyd Blankfein, would pocket $53.4m this year. This paypacket broke an industry record set only last week at Morgan Stanley—its chief, John Mack, will get around $40m for his work in 2006. The huge sums of cash and the attendant publicity prompted Mr Blankfein to call for humility as his troops reflect on their stellar year.

Even if some bankers do exercise a little modesty when it comes to spending their vast earnings this is unlikely to dampen the mood of purveyors of luxury goods and fancy homes, who hope to pick up more than a few crumbs from Wall Street’s table. Orders for bespoke suits are up on last year, says Jack Mitchell, who kits out some of Wall Street's financial bigwigs. New York officials are delighted, too. They have slashed the city’s budget-deficit forecast, in part because of the sharp rise in tax receipts from investment banks.

The banks can thank near-perfect markets for their good fortune. Mergers and private equity are booming, as are stockmarkets (the Dow Jones Industrial Average hit another record high on Tuesday). Volatility is low, credit still plentiful. Hedge funds and others are trading derivatives at a furious pace, providing a further lift to the banks’ prime-brokerage businesses. In these conditions, the banks have (so far) profited handsomely from ratcheting up their own risk-taking. Across the industry, value-at-risk—a measure of potential losses on a bad trading day—has risen steadily. Some 70% of Goldman’s net revenues now come from trading and investing on its own account.

Everyone knows this cannot last forever. The banks are hoping that their scope will help them when markets turn. Growth prospects look good in Asia and Europe, and all of the leading firms apart from Bear Stearns now do a big chunk of their business outside America. They are also beefing up their distressed-debt and bankruptcy teams, a source of profit that should mitigate any pain from a rise in defaults and tougher debt markets.

But with investment banks outperforming their commercial-banking counterparts on almost every measure, including share price, the gloating will be hard to contain. Just now, much of it is directed at Citigroup, which is under pressure to cut costs and raise its share price. Strikingly, the financial conglomerate is paying slightly higher interest on its five-year debt than Lehman or Bear Stearns.

Moreover, any investment banker worth his salt will tell you that there is not much money in meekness. After a day or two reacquainting themselves with their families at Christmas, most will race back to their desks next week, hungry to make another killing.

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Well, capt. not my cup of tea..but like your serious and meaningful discussions...and also your sense of humour..

And I love your sense of humour too, SNDY!

I guess not many folks in the mood to talk about money ...he he. I dunno why but I get a kick out of people making such hideous profits. Not as obscene as the oil companies, but definitely up there.

Thanks for bumping the thread up.

:)

admiral,
if by any chance u can get me in one of those firms would b gr8... (O: mero bonus ko 50% commission :P u getting LOL (O: we need to use the influence of ADMIRAL

any way how u doin? being LOADED with WS bonuses!!!!

Ha ha ..Yeah, why not? I can surely use the referral bonus money for a nice vacation ...LOL!

WOW Goldman Sachs setting aside $16.5 billion (that's billion with a B) for bonus pay?? when their market cap itself is only $90 billion? so just this year they paid 18% of their total market cap on bonuses?? that's doesn't sound right. i don't know man...i am all for rewarding your best and the brightest but common, it's gotta be with in a reasonable limit. what i consider the most unethical practice in all these investment bankers and their bounuses is they gamble with your $$$ by putting your assets at risk but if they get luck and the gamble pays off, they are the one with hefty reward.

ah well....i hope sooner than later most folks start taking control of their investments themselves to put an end to these ridiculous incentives.

thanks CH for the article...didn't know G S spent so much on bonuses.

Isn't it eregious, hukka Nepali? :) But hey, as long as they are delivering, I guess people have no choice but to put up with it.

Have a good one.

Goldman's bonus is freaking $53.4..geez...i would be a CEO of a company soon! I just have to play the waiting game.

as per stocks, i see adobe goin up, and Jim Cramer seems to see the same thing.

still, i trade currencies than stocks. quick and big! :)

seems like all of you are into stocks/bonds or commodities. Nay in forex?

oops, i meant Goldman CEO's bonus

Redstone, don't know much about forex, other than seeing the late night CNBC infomercials on it. seems pretty simple and looks like not as much of reserach and analysis involved compare to the stock market. is that true? if you are doing it, how long has it been and well the real Q...how are you doing ($$ wise)? i mean without getting into your account details obviously LOL

thanks

Hukka bro,
Forex has very high liquidity. I hate holding on to stocks for a long period of time. The currencies are affected pretty quickly by the economic news. It needs some practice and understanding of the currency pairs, such as GBP/USD. There are more that can be traded. If you've been doing stocks for a while with technical analysis, you should be able to fit in FOREX pretty quickly. Im not saying that you can be profitable the next day you start forex, but visit FX brokers, and get a demo account and get the feel for it.

$$ wise, im doing not doing bad at all. Accounts get big, then lose, then big and back and forth. But haven't lost that made me lose my clothes! HAHA. Except for last week, all my trades went to opposite direction, so $600+ loss in last 2 weeks. Only reason, damn US economy looked weak, London was coming strong, but one weakness of London and 2 strongs of US, tumbled the market down.

There's always loss in the market, and some gains. But if you control your losses, profits are set up very easily! :)

And other thing, you have LOTS that you can buy in. Of course, market is not measured in points, its pips, and 100 pips is 1 point, which is 100 cents difference in currency trade. you can get to .01 to 20 lots. so imagine, 100 pips = 1 point = 20 lots = 20*100 :)
its not guaranteed but, more you practice, the better you get.

For beginners, i'd say go to - www.babypips.com they have glossary and some good info on how it works and technical analysis such as breakout and how to use EAs, MA, and MACDs.

then brokers like FXCM, FXSol, Forex.com provide good demo accounts. Best charting would be Metatraders. I'd recommend to get demo with Metatrader

Nice to see , discussion on trading? Just a suggestion if you are trading forex: Use technical Analysis : boook by John J Murphy and on psychology use disciplined trader.

What firms u work for fellas ?

I don't work for any firm, im just an individual trader. :)

i've learned a lot in technical analysis, but better if i learn more right?

the title is called, Use of Technical Analysis?

Cool ; just to throw a little fact ; At Goldman top traders make more than the CEO; by the way any broker recommendations; or u into banks.

U in u.s? Europe?

try Oanda.com ..nice plat form but leverage is not so huge though. They give u demo that don't expire.

US. Brokers for Forex? go to google Metatraders, or FXSol.com, forex.com, FXCM.com.

dunno about stocks, there are some like etrade, charles schwaab and others.

Forex got money too. i know a guy who has investing firm, and made 80,000 in fkin November only. Of course he's one of them big boys.

i trade forex; money is good. its the fastest way to multiply money i have ever seen.

u talking meta trader 4.

is he nepali?