Goldman Record Year Shows New Wall Street

Goldman Sachs stock realtime chart
http://realtimecharts.blogspot.com/2007/09/investment-bank-chart.html

Somewhere in the wreckage of securities backed by subprime mortgages and the resulting seizure in the credit markets, is a new paradigm on Wall Street where Goldman Sachs Group Inc., increasingly perceived as the world's biggest hedge fund, will report record earnings for 2007.

While Goldman, the largest securities firm by market value, insists that it caters to the needs of clients and has never been anything but customer-driven, New York-based Goldman also is considered No. 1 in proprietary trading and manages more hedge funds than anyone except JPMorgan Chase & Co.

And like Paulson & Co., Harbinger Capital Partners and Hayman Advisors LP, which are posting their highest returns when so many conventional financial institutions are reeling from subprime investments, Goldman profits substantially from allowing its traders to use the firm's capital to speculate on whether the price of assets will fall or rise.

``The real world is much better than what we're reading in the headlines,'' said Michael Holland, who oversees more than $4 billion at Holland & Co. in New York. ``Many more billions are being made on the positive side than are being lost.''

Goldman may be the most prominent example of the transformation of the securities firm that behaves more like a hedge fund. Like New York-based Goldman, Morgan Stanley and Lehman Brothers Holdings Inc. also will report record earnings this year, according to analyst estimates compiled by Bloomberg. Oct. 8 (Bloomberg) --