...Portfolio Strategy Portfolio Strategy This paper will focus on 23 global emerging markets studied by Goldman Sachs Investment Research. In this paper I will revise the initial portfolio strategy from 1999 that touched on long-term perspective on short term risk. The emerging countries are within Asia, Latin America, Eastern Europe, and Middle East. The information the company provided was strictly based on a predicted study of future outcomes based on emerging markets. The paper of itself does not issue a company strategy on how to use the information found. In this paper I will use scenarios the company presents and determine how Goldman Sachs should invest 5 million dollars recently received to maximize its wealth. In the overview Goldman Sachs mentioned: That they developed a model of discount rate determination that permits the company to recreate discount rate history and calculate discount rates for 23 emerging markets over the last 25 years. The comparison of current discount rates versus their long-term trend has powerful investment implications and turns the investment decision on its head. Abnormally high discount rates relative to history (normally interpreted as punishing cash flows) may be a buy signal, while abnormally low rates may be a sell signal. Current emerging market discount rates are approximately in line with their five-year moving average. From purely a risk perspective, Asian markets appear undervalued, while Latin America and EMEA...
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...Goldman Sachs Stockholders The group and I have decided that Stockholders are fourth in line when it comes to importance. Stockholders are important to the Goldman Sachs because they’re the individuals and/or groups whom provide the initial capital for the corporation. Stockholders also meet annually to determine if the corporation is heading in the direction they want. If not, they can vote for new board of directors. Stockholders are mainly interested in how the company is managed in order to maximize the return on their investments. Also, stockholders are interested in how the managers and employees are behaving. If they’re behaving unethically, this could hurt the company’s reputation, putting the stockholders capital to waste. In terms of needs, stockholders need to know that the capital they invest is not wasted in the long run. They expect the business to be highly profitable, and to be honest with them. Stockholders also expect to have some level of control over the board. This was if members are not performing as expected. Stock holders also expect greater protection of investment, as well as greater returns. When Goldman Sachs was hit with all the legal woes, stockholders called a meeting to clarify what should and shouldn’t be done. At the meeting the stockholders had a number of proposals that would need votes to determine the outcome. Among them: executive compensation, collateral increases for derivatives trading and splitting the chairman/CEO position (Washington...
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...Melisa Schellhamer, April 13, 2010 Melisa Schellhamer, April 13, 2010 SEC files a fraud case against Goldman Sachs, an industry leader, is now being investigated for unfair investing scandal. SEC files a fraud case against Goldman Sachs, an industry leader, is now being investigated for unfair investing scandal. Goldman Sach’s Case # 5 AC805 Advanced Management Accounting Control Systems Goldman Sach’s Case # 5 AC805 Advanced Management Accounting Control Systems The Goldman Sachs fraud case opened by the Securities and Exchange is one of the items that were highlighted by the down turn of the economy in the last few years. Goldman Sachs has vigorously denied any wrongdoing, but the case against them seems fairly tight if the information currently provided is accurate. At the center of all of this Fabrice Tourre. Tourre is an employee of Goldman Sachs that has been charged with fraud. The nature of the charge is that as an employee of Goldman Sachs he helped create a Collateralized Debt Obligation (CDO) that was not disclosed to potential investors. More damning than anything however that seized email correspondence is seems to point to the fact that he was fully aware of what he was doing. How this all ties in is that a CDO is an investment vehicle whose performance is directly related to a set of assets. In regards to this case the CDO was a family of securities that were backed by subprime residential mortgages. As this is considered risky...
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...9-406-002 REV: MARCH 22, 2007 BORIS GROYSBERG SCOTT SNOOK Leadership Development at Goldman Sachs Our people have driven Goldman Sachs’ success for 130 years through sustained, superb execution across a range of markets and products. The best way to maintain that advantage is by recruiting, training and mentoring people as we always have—one at a time, with great care. We want Goldman Sachs to be a magnet for the very best people in the world—from new graduates to senior hires. At the same time, we are focusing on developing our very deep bench of talented people and improving and extending our skills. We are, for instance, placing young leaders in demanding positions that stretch their abilities. We are also devoting more time and attention to the formal training and development of leaders, particularly senior leaders. — Henry M. Paulson, “Letter to Shareholders,” Goldman Sachs, 1999 Annual Report Late on the evening of November 7, 1999, a small cadre of senior leaders huddled around a conference table on the 22nd floor of 85 Broad Street, deep in the heart of New York City’s financial district. The heady atmosphere and high-octane blend of intensity, anticipation, and quiet professionalism were not unusual for one of the world’s most storied investment banks. Tonight, however, eleven of Goldman Sachs’ finest were working not on a major acquisition or IPO, but on a revolutionary leadership development plan for the firm. In June 1999, Goldman’s Management...
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...| A brief look at one of the 10 best investment banks- Goldman Sachs | | Submitted ToHumayan Kabir Course Teacher Merchant and Investment Banking Course code: FNB 308 Submitted ByShadman Sakib (Student ID: 1264) Md. Fahad Bhuiyan (Student ID: 1271) Edward Francis Gomes (Student ID: 1290) Md. Shariful Alam (Student ID:1287) Rezaul Karim (Student ID:1643) | Dhaka, BangladeshJune 23, 2012 | AssignmentDepartment of Finance & Banking Jahangirnagar University Savar, Dhaka | Introduction The Goldman Sachs Group, Inc. (Goldman Sachs) is global investment banking, securities and investment management firm that provides a range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Goldman Sachs reports activities in four segments: Investment Banking, Institutional Client Services, Investing & Lending and Investment Management. As of December 2011, it had offices in over 30 countries, including office in financial centers worldwide. Mission Goldman Sachs Group use Business Principles rather than a Mission Statement: 1. Our clients' interests always come first. Our experience shows that if we serve our clients well, our own success will follow. 2. Our assets are our people, capital and reputation. If any of these is ever diminished, the last is the most difficult to restore. We are dedicated to complying fully with the letter and spirit of the laws...
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...Ethical Dilemma: Goldman Sachs Was Goldman Sachs Socially Responsible? Pamela Bryant Northcentral University Abstract Illegal and unethical activity was prevalent in the Goldman Sachs administration and the charges filed against them by the SEC were inevitable. The underlying thought at Goldman Sachs amidst the allegations was a social purpose and a contribution to the economic cycle. While there were many gray areas of activity, this research will focus on the investment strategies used to control the clients financial investment gain and in most cases loss. Furthermore, this paper will outline the unethical behavior that was associated with the fraudulent transactions of Goldman Sachs as it related to the clients and public investors. Was Goldman Sachs Socially Responsible? The problem to be investigated is whether Goldman Sachs violated its own Code of Ethics in dealing with clients and public investors. According to the Preamble of the Business Code of Ethics, Goldman Sachs believes the highest standard of integrity should be included as the focal element in a business relationship. Regardless of how perceptive one might be in understanding the investment strategies of Goldman Sachs or even its relationship to the difficulties of the market, it is clear that not all activities were in accordance with the good old-fashioned law of principle and ethics. Background Goldman Sachs history has never been clear of controversy, dating back to its inception in...
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...Gray: The Goldman Sachs Standard Are there ethics in big business? Or does big business answer to a different power? This can be a rather gray area. The problem to be investigated is the Goldman Sachs Standard and the ethics (or lack thereof) that exist in the company. The original market strategy was to provide loans for small businesses and then sell these loans as commercial paper. (Jennings, 2012) In the 1920s, this became a tough market in which to make a profit. So, to borrow a phrase, when the going gets tough, the tough change strategies. In the late 1920s, Goldman changed its investment strategy to layered investments. This strategy involves creating a company and then personally purchasing a large amount of the shares. Goldman would generally purchase approximately 90 percent of these shares. The public, unaware of the original purchase, only saw a profitable company so they eagerly purchased not only the remaining initial shares, but also purchased shares sold by Goldman at a higher rate. Goldman would also purchase some of these to artificially inflate the market even further. This enabled Goldman to make money off of the secondary sales. Goldman was lying to its clients because the company it created was not truly as profitable as the inflated share price would indicate. It was fully aware of this and continued to layer additional companies into the strategy that would appear successful only as long as the market continued to grow. Goldman was lying...
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...Leadership development at Goldman Sachs 1. Why is Goldman Sachs considering a more systematic approach to developing leaders? The 90’s boom had a downside for the banks: “hot” new industries placed additional stress on an already tight labor market by wooing skilled workers away from more traditional fields. The ensuing “war for talent” threatened to put a damper on the growth of professional service firms as bankers, lawyers and consultants all sought opportunity in these new industries. Many firms turned to unconventional sources to fill the staffing void, eventually hiring Ph.D. graduates, medical doctors, scientists, and others with non-traditional business backgrounds. The increasingly diverse workforce challenged the strong cultures of professional service firms that historically had preferred to grow their own talent. Time-honored, organic models of leader development were put to the test. 2. What should the Leadership Development Advisory Committee include as key design features of Goldman’s new leadership development program? Goldman’s approach to professional development should be guided by four key objectives: 1. Developing the firm’s key asset: With the firm’s people representing our most critical asset and competitive advantage, the task of keeping our talent excited and moving up a steep learning curve has become mission-critical. 2. Winning the “War for Talent”: Accelerated professional development is a key element in the overall...
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...on China to Overtake US by 2027 | Jim O’Neil, managing director of Goldman Sachs Global Economic Research | By Kim Jae-kyoung Staff Reporter China is expected to overtake the United States in economic size by 2027 as the world's third-largest economy has benefited from the ongoing global economic crisis, according to a noted global economist. In the eyes of Jim O'Neil, managing director and head of Goldman Sachs Global Economic Research, the global crisis has only been a blessing for China, accelerating the global power shift from the West to the East. O'Neil, based in London, coined the acronym BRIC to refer to the fast growing developing economies of Brazil, Russia, India and China. "I think China has had a really good crisis in some ways. It has been good for them, as it forced them to stop being so dependent on exports. I think our 2050 'dream' scenario for BRIC has become more likely, rather than less, since the crisis. The trend growth in Brazil and India seems to be rising also," O'Neil told The Korea Times. According to a Goldman Sachs report, China will dominate the global economy in 2050 with a GDP of $70 trillion, followed by the U.S., India, Brazil and Russia. "I think the likelihood of China challenging the number one spot of the U.S. has actually risen, as now China's growth is going to be determined by domestic forces and the rise of consumption, so it is more sustainable," he said. "On our latest long-term estimates, we think that China might...
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...Lauri Peltonen Student number: 2190329 Goldman Sachs as creepy as we think? This report is concerning talk show, which I watched on CNN. There were four people talking about Goldman Sachs, which is one of the most powerful investment banks in the world. The whole discussion was based on one of former employees’ letter of resignation. Last week Greg Smith, former executive director and head of the firm’s US equity derivatives business, left after almost 12 years at the firm and he wrote an explosive letter where he explained his decision. The letter has ever since been on headlines and now the panelists of the show talked is Goldman Sachs really as toxic as Smith told. The discussion was led by the host and the other participants talked when there was their turn. As one might guess, considering the topic the atmosphere was quite negative. For example one of the panelists, Rolling Stones magazine’s journalist, who some years ago wrote an article concerning the way of act’s in Goldman Sachs, was quite sure that there occur a lot of problems in Goldman at the moment. Smith told in his letter that in Goldman Sachs nothing else matters than money. According to Smith’s letter Goldman’s treasurers are cheating and betraying their clients daily. It is awful to think that some individual company can control world this much. The company owns derivatives as much as the amount of whole worlds GDP is; I think that it is an incomprehensible amount of money. For example meanwhile other...
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...investigated is did Goldman and Sachs engage in shady trading transactions and were these transactions done in the best interest of their clients? Were Goldman and Sachs guilty of not disclosing the trade strategy to investors through their numerous practices of investment tools which they were using? 1. Go back through the case and make a list of each action or practice that could be called a gray area. - In the 1920’s the layered investment strategy was created by Goldman. He created a company and purchased 90 percent of the company’s shares which would seem to be doing very well to the outside investors, the shares would then sell to the public for an additional 10 percent. This area is gray because Goldman was deceiving the public and driving up the price of the stock. Example l00 per share-Goldman buys 90%: public buys 10 %.( Jennings, 2010, p.73-74) - In 1990 Goldman became the Wall Street giant on taking the Internet companies public: this was done by “selling air” Goldman underwrote 47 companies which some may not have shown any profits. “The standard underwriting practice of requiring that a company show three years of profitability before being taken public was no longer enforced.” (Jennings, 2010, p.75) This makes Goldman’s practice of underwriting companies gray because some of the companies did not have any profits but he continued writing. - According to Jennings Laddering known as the “insider scam by the underwriters” because Goldman knew that the initial...
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...Goldman issue new product to bet against the Japanese stock market. Exchange-traded put warrants on Japan’s Nikkei 255 stock average Public launch depends on the price of NPWs (Nikkei put warrants) 1987, BS issued currency warrants by GECC, heavily subscribed. Selling echange-listed currency warrants made three important impressions on GS team. 1. while investors were interested in puts on the yen, puts on the Nikkei would be much more widely demanded. 2. Profits to be made from buying options (sourcing volatility) in institutional markets and resell to retail customers 3. New markets could quickly become satiated. The prices of the currency warrants fell quickly from the initial deal levels Exhibit 1 daily implied volatilities of exchange-listed yen currency warrants 1988, IFR reported the first of a series of recent Eurobonds whose redemption values at maturity were tied to the level of the Nikkei 225 stock average. Exhibit 2 Representative Nikkei-Linked Euro-Yen offerings, Dec 1989 Exhibit 3 Hypothetical Nikkei-Linked Euro-Yen Transactions Through a set of swaps, the issuer transformed its annual fixed-rate yen payments in to dollar-dominated LIBOR-based payments. At maturity, the issuer would redeem the bonds from the investor a price tied to the Nikkei. If Nikkei fell since the bonds were issued, the issuer would pay less than par to redeem the bonds. Thus, it would be as if the issuer sold bonds with final principal payments at par but...
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... Page 3-4 Greece Debt Page 4 Conclusion Page 4-5 Best of the Worst ` Goldman Sachs, the famous investment company, is universally acknowledged as a super star on Wall Street and has been honored with a great reputation for its incredible profitability. However, as a symbol of Wall Street, Goldman has also been featured in greedy and sophisticated traits by numerous critics. The events of 2008 and the recent Greek debt crisis have brought to the public’s attention the dangers of moral hazard and its implications. Some investors have said that one can always see Goldman’s figure in a financial crisis. Indeed, in the latest two destructive financial crisis-the US subprime crisis and European Debt crisis, Goldman Sachs played significant roles in contributing to both and was publicly blamed to be fraudulent. One of the main examples of Goldman Sachs involvement in the subprime mortgage crisis was their formation of various Collateralized Debt Obligations (CDO’s) which demonstrated conflicts of interest, ultimately landing in Goldman’s favor rather than their clients. Starting in 2006 with the Hudson Mezzanine synthetic CDO, comprised of asset backed securities of Goldman’s inventory and single name CDS contracts on subprime Residential Mortgage Backed Securities (RMBS) and CDO securities Goldman wanted to short (390). With Goldman taking the short position, it allowed for them to profit from any losses that this CDO would incur. Their...
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...Executive summary – Goldman Sachs The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world. They report their activities in the following four business segments: • Investment Banking • Institutional client services • Investing & lending • Investment risk management Goldman Sachs commits people, capital and ideas to help our clients, shareholders and the communities we serve to grow. The firm also provides mergers and acquisitions advice, underwriting services, asset management, and prime brokerage to its clients, which include corporations, governments and individuals. The firm also engages in market making and private equity deals, and is a primary dealer in the United States Treasury security market. Former employees include Robert Rubin and Henry Paulson who served as United States Secretary of the Treasury under Presidents Bill Clinton and George W. Bush, respectively, as well as Mark Carney, the governor of the Bank of Canada since 2008, Mario Draghi, governor of the European Central Bank and Mario Monti, the Prime Minister of Italy. As of 2009, Goldman Sachs employed 31,701 people worldwide...
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...February 17 Discussion Question Christopher Suto 1. What is a VIE? An entity (investee) in which the investor has obtained less than a majority-owned interest, according to the United States Financial Accounting Standards Board. A VIE refers to an entity (the investee) in which the investor holds a controlling interest that is not based on the majority of voting rights. As long as the investee is not the primary beneficiary then they do have to consolidate the company on their balance sheet. 2. How did we determine whether an entity need to be consolidated before FIN 45? Before FIN 45, “Many financial institutions were secondarily liable (without adequate disclosures) for many financial instruments held in special purpose entities” (Reinstein, 2012). The old consolidation framework used a common-sense approach, where a company should consolidate operations when they had a controlling ownership interest in another. Controlling abilities were tough to recognize and led to many unconsolidated statements. a. Explain how FIN 46 modified the guidance on VIEs. Originally FIN 46 focused only on special purpose entities and required a reporting enterprise to consolidate them. Soon FASB changed it where FIN 46 should apply to all entities where a VIE exists. Part of this decision involves more judgment now according to sec.gov. There is no bright line test and all facts and circumstances, qualitative and quantitative, should be considered. b. Explain how SFAS 167...
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