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Goldman Sachs buys ‘robo’ investment adviser March 15, 2016

Filed under: Corporate Malfeasance,Economics,Investing Globally — larsfforsberg @ 1:53 pm
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BY:  Ben McLannahan

Goldman Sachs has made a move into the fast-growing world of “robo” investment, buying Honest Dollar, a start-up which aims to make it quicker and simpler to set up savings accounts for retirement.

Goldman’s new business is distinct from firms such as Wealthfront and Betterment, the biggest automated investment companies, which manage pots of cash according to customers’ stated goals and risk appetites. Honest Dollar, launched a year ago in Austin, Texas, does not select portfolios itself but charges a per-month, per-user fee for setting up and maintaining retirement accounts which are managed by Vanguard, the fund manager with $US3.3 trillion in assets.

Honest Dollar declines to provide numbers on how many users it has, but says it is targeting the roughly 45 million Americans – freelancers and small-business owners – who do not have access to employer-sponsored retirement plans.

The size of the acquisition, made through Goldman’s investment management division, was undisclosed.

“We’re trying something very new and innovative, and we love the validation [from Goldman],” said William Hurley, Honest Dollar’s chief executive. “Goldman did an incredible amount of work, putting in the effort of understanding what we are.”

A recent surge of private investment in financial technology companies has prompted the biggest banks in the US to consider whether they would rather buy, build or partner to keep pace with the newcomers.

Goldman, which prides itself on its vast team of software engineers, has mostly bought or built, last year launching an internal venture to challenge the likes of Lending Club in loans to consumers and small businesses. It is also a driving force behind Symphony, a big consortium of financial services firms aiming to unseat Bloomberg from its dominant position in messaging.

“Honest Dollar has created a simple solution to a complex retirement savings problem,” said Timothy O’Neill and Eric Lane, co-heads of Goldman’s investment management division, in a statement. “Together, we have the potential to help millions of people achieve their investing goals.”

Mr Hurley, 44, who prefers to go by the name “Whurley”, pursued a career as a bassist in a funk band before a serious car accident sparked an interest in computing. He worked at Apple, IBM and Symbiot before founding his own design firm, Chaotic Moon Studios, in 2010. He left the company – which was sold to Accenture last year – in 2014 to co-found Honest Dollar.

He launched his latest venture about a year ago in Austin at South by Southwest, an annual set of film, interactive media, and music festivals and conferences. By then he had raised $US3 million of seed funding, including a personal investment from Vikram Pandit, the former chief executive of Citigroup.

Honest Dollar, which now has 30 staff, will stay in Austin and operate as part of Goldman’s investment management division.

“As a software person, this is my first foray into financial services, but Goldman has a 100-plus year history and a lot of the brightest minds in this space,” said Mr Hurley. “So far we’ve built this on our own; imagine what we can do with access to that data.”

Financial Times

 

My thoughts on this transaction:

The tentacles grow.  This is probably the first time in history that the word “honest” has been used in the same sentence as Goldman.  Buyer beware.

 

 

Sitting on The Fence May 9, 2015

Do you consider yourself a market timer?

Are you a market maker?

Do you know when the next market crash will happen?

Can you call the peak?

Do you have insider information regarding when Goldman Sachs will pull the carpet from under the U.S. stock market?

Is Janet Yellen your cousin?  Does she give you tips?

If your answer is no to all of these questions, then why aren’t you taking this opportunity to divorce yourself from this bubble while it’s still inflated?

It is amazing to me that more people are not taking this amazing opportunity to take profits, and instead are electing to roll the dice on market timing or give the keys to their future to some guy who has no stake in their success.

I know that I should not be surprised, as history seems to repeat itself every 7 to 10 years these days.  People have exceedingly short memories and attention spans that can only be measured in milliseconds.

I really don’t want to be that guy who said “I told you so”…or “I tried to tell you”.  I get no joy in hearing sob stories about how people waited too long and got wiped out by the debt tsunami.

The current market value has no basis in reality.  When it goes pop, it is going to destroy the retirement of millions of Americans who blindly followed the pundits on CNBC.

Please, Americans, spend more time thinking about your future and less time getting re-educated by mass media.

Lars Forsberg
Longboat Retirement Solutions LLC
406-551-4775
www.myselfdirectedretirement.com

Call for a FREE consultation

 

Gold-Investment Demand in China to Advance 10%, ICBC Says June 13, 2012

June 11, 2012

BY: Bloomberg News

Gold-investment demand in China may gain more than 10 percent this year as buyers seek a haven from Europe’s debt crisis and the prospect of weakening currencies, according to the country’s largest bullion bank.

“Investors here want to hold part of their assets in gold to hedge for the risks, especially now that the financial crisis has evolved into a sovereign crisis,” Zheng Zhiguang, general manager of the precious metals department at Industrial and Commercial Bank of China Ltd., said in an interview in Shanghai.

China will topple India this year as the largest bullion market as rising incomes bolster demand, the World Gold Council forecasts. Gold may gain for a 12th year in 2012 as European policy makers strive to avoid a breakup of the euro zone and the U.S. Federal Reserve weighs more stimulus to aid the recovery. Investors in China, facing lackluster equity markets and property curbs, are looking more to the metal, Zheng said June 6.

“It’s necessary for individual, institutional or even government investors to hold gold when the value of money is decreasing at a time of possible quantitative easing or excessive money-printing practices,” said Zheng.

Investment demand in China was a record 98.6 metric tons in the first quarter, 13 percent higher the same period in 2011, according to figures from the producer-funded council. Last year, it climbed 38 percent to 258.9 tons compared with 2010, as overall demand gained 20 percent to 769.8 tons. China’s total gold demand may reach 1,000 tons this year, the WGC has said.

Debt Crisis

Gold for immediate delivery traded at $1,598.02 an ounce at 4:03 p.m. in Shanghai, 2.2 percent higher this year. The price touched $1,526.97 on May 16, the lowest level since December, as Europe’s debt crisis weakened the euro and investors favored increased dollar holdings.

While a stronger dollar may pressure bullion, “I’m optimistic on the gold prices in the long term because of the China demand,” said Zheng. “There are too many uncertainties now in the global economy, politics and the financial sector.”

ICBC represents more than 20 percent of the turnover on the Shanghai Gold Exchange, China’s largest spot market for precious metals, and more than 30 percent of the gold-leasing business in China, according to Zheng. The lender accounted for about 16 percent of nationwide bullion sales last year.

Gold imports by mainland China from Hong Kong climbed 65 percent to a record 103.6 tons in April, according to data from the Census and Statistics Department of the Hong Kong government released on June 5. The increase came even as Lao Feng Xiang Co. (900905), the mainland’s biggest gold-jewelry maker, said in May that gold-demand growth in China may stagnate this year as falling prices put off investors and an economic slowdown crimps sales.

Hurt Exports

The second-largest economy expanded 8.1 percent in the first quarter, the slowest pace in almost three years as Europe’s crisis hurt exports. Should Greece exit the euro, the expansion may slow to 6.4 percent in 2012 without stimulus, China International Capital Corp. said on May 23.

China, which on June 7 announced the first cut in borrowing costs since 2008, has curbed property investments to avoid a bubble. The Shanghai Composite Index (SHCOMP) declined 15 percent in the past year, while spot bullion gained 5.4 percent.

On a three-month basis, gold demand in China eclipsed India’s over the past two quarters, according to the World Gold Council. The increased wealth of China’s middle class is helping to drive consumption,

Albert Cheng, the council’s Far East managing director, said in an interview in May.

Last Resort

Greek voters are set to go the polls for the second time in two months on June 17 in a vote that may determine whether the country stays in the 17-nation euro. Goldman Sachs Group Inc. (GS) said gold remains the so-called currency of last resort, forecasting a rally by year-end, according to a May 9 report.

Spanish Economy Minister Luis de Guindos said on June 9 that he would request as much as 100 billion euros ($126 billion) in emergency loans from the euro area to shore up the country’s banking system.

That, coupled with weekend trade data from China, helped to boost stocks and commodities today.

As China allowed investors to buy and hold gold only in recent years, “there’s explosive, pent-up demand because the Chinese have an attachment to gold,” said Zheng, predicting that growth in investment demand will beat the expansion in jewelry sales. “There’s great potential for expanding China’s physical gold investment market.”

 

Forget the BRICS—There’s Better Growth Out There June 10, 2012

5/16/2012

BY: Frank Kane

Conventional wisdom is all about emerging economies, but it seems most of the pundits have become engrossed in the big-name economies and haven’t dug deep enough into what’s really happening out there, observes Frank Kane of The National.

It is a brave, or perhaps foolhardy, man who goes against the accepted economic orthodoxy of the day. But Ruchir Sharma, an investment manager with Morgan Stanley, has done just that in a study of the global economy.

Since the turn of the century, economists have fallen in love with the concept of the BRIC economies—Brazil, Russia, China, and India—as the leaders of global economic growth. Originally promulgated by Jim O’Neill of Goldman Sachs, the BRIC thesis has been amended and expanded over the past decade, but the core remains the same: those four economies will dominate world economic activity at some fast-approaching date.

Sharma’s book Breakout Nations: In Pursuit of the Next Economic Miracles challenges the BRIC orthodoxy—although he mentions it specifically only once, in passing, in nearly 300 pages.

The attractions of the BRICS—the group includes South Africa now—are overdone, he believes. Their best days of rapid economic growth are behind them, and they each have specific economic, political, or social problems that will circumscribe their future potential. Also, other economies, mainly in Asia but also in other parts of the global economic “frontier,” offer better investment prospects.

“I’m an investor, not a marketeer. I have to put my money where my mouth is,” he says, echoing critics of the BRIC concept who say it was just a marketing campaign, albeit an effective one, drummed up by Goldman Sachs.

So why are the BRICs passé, and which countries are the “next economic miracles”? On the biggest BRIC in the wall, Sharma offers words that will comfort those—mainly in the United States—who fear China’s seemingly inexorable rise.

“China is on the verge of a natural slowdown that will change the global balance of power, from finance to politics, and take the wind from the sails of many economies that are riding in its draught,” he says.

The signs are already there for China, with GDP growth forecasts falling to 6 or 7%, instead of the heady double-digit days of the past two decades. Meanwhile, Sharma accuses his home country of perpetrating the “great Indian hope trick” of offering high levels of growth and development, but without delivering.

In India, too, growth rates are falling, but the hugely diversified country is at risk of socio-demographic, cultural, and political weaknesses, he says: “The Indian elite seems more focused on how to spend the windfall than on working to make sure the rapid growth actually happens.”

Brazil and Russia, Sharma argues, are both vulnerable because they are overdependent on commodity production that could turn against them if the global markets for oil and other raw materials prove to be a “bubble.” Both countries have their own specific problems, too, that could hamper future economic growth.

Sharma is critical of Russian political and economic policymakers, and says government spending is still too big in Brazil, leading to high interest rates and an overvalued currency. Russia and Brazil are the most expensive countries on his “Four Seasons index,” which compares the cost of staying in the global hotel chain in different countries.

“The unthinking faith in the hot growth stories of the last decade ignores the high odds against success. Very few nations achieve long-term rapid growth,” Sharma argues.

And his long term is really long term. Since 1950, only six countries—Malaysia, Singapore, South Korea, Taiwan, Thailand, and Hong Kong—have maintained an average of 5% growth over four decades, and only two—South Korea and Taiwan—have managed it for five decades.

This is the key to future growth, he says. Both South Korea and Taiwan share similar histories as first colonies of Japan that rebuilt their economies according to the lessons of the Japanese postwar miracle, but which also learnt from Japanese mistakes.

Both are entrepreneurial, organized, hard-working and efficient, focused on manufacturing and exports as hard-currency earners. But he prefers South Korea, the “gold medalist” of global economic development for several reasons, not least because it has a trick up its sleeve.

He believes the country can become the “Germany of Asia” by leading a successful and peaceful reunification with North Korea, avoiding the financial and currency mistakes of the Germans in the 1990s, and benefiting from a quantum leap in domestic population and consumer markets.

Other “frontier” markets also catch Sharma’s eye. Turkey has the potential to become a stable Muslim democracy and an economic role model for the rest of the Muslim world. Anatolia could be the manufacturing heartland for vast areas of the Middle East and central Asia.

Indonesia, with a large population and a wealth of untapped natural resources, “is by far the best-run large commodity economy” in the world, and has even learnt the art of “efficient corruption,” where a payoff to a government official actually ensures the job gets done.

Even in crisis-ridden Europe, Sharma finds a “sweet spot” somewhere between Warsaw and Prague, where governments have avoided the pitfalls of the single currency but exploited the benefits of the single market.

How does the Middle East fit into this global tour d’horizon? Sharma’s answer is, largely, that it does not.

Iran, beloved by some post-BRIC theorists as a potential powerhouse, is “shut to the world,” he says. “Intriguing” Egypt could become another Turkey, but there is a long way to go. The Gulf is a “world unto itself,” he concludes, “a world built entirely on revenues from oil and gas.

“Black gold has flowed so easily for so long that the typical Gulf state has become an oil-fueled jobs machine with subsidies on offer for every essential item, ranging from food and power to schooling.” The subsidy culture has only grown since the Arab Spring, he says.

There are a couple of glimmers of hope in the Gulf, however. One is the prospect of reform in Saudi Arabia. The other is the policy of many Gulf states to direct future economic development via sovereign wealth funds along the Norwegian model.

Sharma may not have proved the BRICs are dead, but his book shows there is life elsewhere in the global economy, and where it is.

 

Goldman Director in One Million Fraud Trial June 2, 2012

Jamaica Observer Wednesday, May 30, 2012

 NEW YORK — A former Goldman Sachs board member brazenly committed securities fraud by feeding confidential information about the investment bank to a high-flying hedge fund manager, who used it to make a killing on the stock market, a federal prosecutor said Monday at a closely watched insider trading trial.

Rajat Gupta “threw away his duties, threw away his responsibilities and broke the law”, Assistant US Attorney Reed Broadsky told jurors in federal court in Manhattan.

In his opening statement, Broadsky recounted how the hedge fund manager, Raj Rajaratnam, earned close to $1 million after Gupta allegedly told him that Goldman had received an offer from Warren Buffett’s Berkshire Hathaway to invest $5 billion in the banking giant in 2008. “That was trading on secrets coming from someone who actually knew what was happening in the confines of the board room,” Broadsky said. “That’s called insider trading and that’s a serious crime.”

The jury, which includes a grade schoolteacher, a psychiatric nurse and a non-profit executive, was selected Monday morning.

Before the jurors were picked, prosecutors said they planned to call Bill George, a Harvard Business School professor who serves on Goldman’s board, as a government witness.

The 63-year-old Gupta is also a former director of Procter & Gamble Co, one of the 30 companies that make up the Dow Jones industrial average and the owner of many well known brands including Bounty, Tide and Pringles.

The Westport, Conn., resident has pleaded not guilty to one count of conspiracy to commit securities fraud and five counts of securities fraud stemming from his communications with convicted former hedge fund manager Raj Rajaratnam. His lawyer was to give his opening statement later Monday.

A key to the case is a July 29, 2008, phone call between Gupta and Rajaratnam that began with the old friends exchanging mild pleasantries, but then quickly turned serious and — by the government’s account — criminal.

Rajaratnam asked about a rumour that Goldman Sachs “might look to buy a commercial bank”. On the other end of the phone, Gupta confided there was a “big discussion” on the subject at a recent meeting.

Prosecutors will try to convince a jury that the intercepted call show and other evidence shows Gupta was providing inside tips that gave Rajaratnam an illegal edge in massive stock manoeuvers. The tips from Gupta were like “getting tomorrow’s business news today”, Brodsky said Monday.

As a Goldman board member, Gupta had intimate knowledge of the confidentiality standards, the prosecutor added. “He broke the very same rules he put in place,” he said.

Defense lawyers say they’ll argue Gupta was a straight arrow who only shared public information with the billionaire hedge fund boss. They also say he was devoted to raising money for charity as to Goldman’s bottom line.

The 24-minute phone call that’s central to the Gupta case helped convict Rajaratnam last year in the same courthouse. The Galleon founder is serving an 11-year prison sentence, the longest ever given in an insider trading case.

Rajaratnam, who was born in Sri Lanka, has been the biggest catch so far in a wide-ranging insider-trading investigation by US Attorney Preet Bharara that’s resulted in more than two dozen prosecutions of white collar defendants. But based on Gupta’s standing in the world of finance, his trial could draw more attention, and a potential conviction could resonate farther.

Aside from his role at Goldman Sachs, the Indian-born Gupta is the former chief of McKinsey & Co., a highly regarded global consulting firm that zealously guards its reputation for discretion and integrity.

Prosecutors in effect previewed their case against Gupta at the Rajaratnam trial.

Jurors in that case heard testimony that at an Oct. 23, 2008, Goldman board meeting, members were told that the investment bank was facing a quarterly loss for the first time since it had gone public in 1999.

Prosecutors produced phone records that they said show Gupta called Rajaratnam 23 seconds after the meeting ended, causing Rajaratnam to sell his entire position in Goldman the next morning, saving millions of dollars.

Also played at trial was the tape of Rajaratnam grilling Gupta about whether the Goldman Sachs board had discussed acquiring Wachovia or an insurance company. “Have you heard anything along that line?” Rajaratnam asked Gupta.

“Yeah,” Gupta responded. “This was a big discussion at the board meeting.”

Prosecutors sought to maximize the impact of the Gupta tape by calling Goldman Sachs chairman Lloyd Blankfein to testify that the phone call violated the investment bank’s confidentiality policies. Prosecutors say Blankfein will return to the stand at Gupta’s trial.