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Two Ways: Goldman Sachs Hungry for More Risk


Strengthen your portfolio in good times and bad.

Goldman Sachs (GS) is upping its bets and taking on more trading risk than rival Morgan Stanley (MS). According to Reuters, the Wall Street firm is sticking to a strategy that served it well during the financial crisis: Funding itself in bond markets while trading actively for both clients and its own accounts.

Goldman Sachs' VaR, or value at risk, a measure of the maximum possible losses the company will face on 95% of its trading days, rose 52%, to $240 million. Morgan Stanley showed just a 12% increase in VaR, to $115 million.

The difference, some say, is that Morgan suffered a near-death experience and has been slow to ramp up its risk-taking. But on the other hand, some believe Goldman is exposing itself to more pain if the economy were to deteriorate further. CEO Lloyd Blankfein even suggested yesterday that Goldman may be positioning itself for difficult times, and questioned whether a true economic recovery really had begun.

For more on the economy, see Professor Kevin Depew's Five Things: Credit Crisis Abating... Debt Crisis Remains.

From the Bull Pen: Bulls can look elsewhere. And what sounds do they make? Moo! Have a look at the daily chart for Market Vectors Agribusiness ETF (MOO). See the chart consolidating above $36. A sell stop can be set below that level.

From the Bear Cave: If your preference is to remain short, for a technical play, look to Gilead Science (GILD). A buy stop can be set real tight above $45 on downside attempts.

That was the hump! Have a good night!
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