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September 14, 2007

Goldman Sachs Global Alpha Blows Up Again!

posted by MR WAVETHEORY at 9/14/2007 05:11:00 AM
Goldman Sachs Global Alpha blew up again. It is down 22% in August 2007 according to a "Dear Investors" letter from Goldman Sachs Group Inc. (NYSE GS), the venerable and occasionally heretofore erstwhile slimy investment bank. LOL! The only solice that investors can relish in is that the largest investors in the fund are Goldman Sachs partners themselves - former and current. The poor risk management of the fund shows that even funds that say they are risk neutral can run into problems. You might remember they also had problems last August - like in 2006!

The problem at GS Alpha? They shorted Asian bonds! Oops. Japan didn't raise rates as fast as they hoped.

August was the worst month in the fund’s 12-year history; it was down 22.7% last month alone, according to a recent letter to investors. So far this year through the end of August, it was down 33.4% due to bad bets on everything from the Australian dollar, the Norwegian stock market and Japanese government bonds. The letter gave no indication about how the fund was faring this month. Over the past 12 months, the fund has lost 37% of its value.

Bummer! Better luck next time.

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