May
15th,2009
6:58 PM
Flawed analysis! Do you think J.Aron didn't hedge their risk? Do you think they kept this on their books? I highly doubt that. SSC could have gone to other investment banks and asked their prices on this same contract. It a pretty simply contract and other banks would know how to price it. Also, Goldman's research department has been wrong more times than it has been right. They predicted oil would go to $200/barrel. You give to much value in their ability to influence prices and predict the future. This is such small money to Goldman they probably wish that they would have lost money on this contract and not had this much bad publicity. They probably hedged the contract right away through the spot/forward markets and just made the spread. As you stated "have the demand for this hedging" a lot of companies have the demand for this type of customized product. Goldman was just satisfying the demand in a customized way. The fact that the client lost money on the contract probably makes Goldman feel bad- they want recurring business not one-off business.
—TXCap, China
 
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June
29th,2009
9:40 AM

This article is an interesting speculation. Maybe it looks like a gambling derivative or from other perception it is straight business just like any other investing option. Whatever it maybe. SSC and others should do their homework before investing so much. I am sure Goldman Sachs and their research team has done their analysis and prediction before approaching clients.

—AD, UK
 
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September
4th,2009
4:08 PM
sdf
—sdf, sdf
 
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December
24th,2009
1:01 PM
Ha Ha! China Stakes, you guys call this a masterpiece? That's hilarious. OK, so you might think it is a casino. But isn't everything in financial investment like a casino? There is a probability of various outcomes. Any decent businessman realizes this and makes efforts to understand and quantify the risks. Sometimes you win, sometimes you lose. Goldman and all the others hedge their positions. They're not the only operator in the casino. Just like the reinsurance market. As for the poor customers who lost...fuel derivatives should be used to hedge operating risks. Air China should have gauged its operational fuel needs and the price elasticity of its revenue and the timing of price changes in order to determine an optimal hedge. So if they end up paying on a derivatives hedge, they conversely enjoy the lower operational cost of fuel. That's what is called a HEDGE. But the airlines didn't do this. They essentially were speculating and they lost. So they have to, once again, get big brother SASAC to lean on the banks to bail them out. Where is the corporate governance? The risk assessment? As for Goldman, of course they were conflicted. Any fool would check other independent analysts about oil price forecasts before buying. Give me a break. Come on guys, look in the mirror. Take responsibility and read the fine print of the contracts. If you don't understand it, don't sign. Those guys were too busy worrying about what color pens to have at the signing ceremony and how much Moutai to have at the signing dinner to worry about what the contract said. By blaming Goldman and other western banks, you just admit you are either stupid or careless.
—Hua Qiao, USA
 
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