Is VAR an issue with top banks?

The issue of value at risk (VAR) has been discussed so much it almost seems passé. But it is worth additional discussion in light of the blow-out earnings released by Goldman Sachs and Morgan Stanley. At Morgan Stanley in particular, savvy trading played a huge role in the first quarter. Trading value-at-risk was $90 million, compared with $61 million in the previous quarter and $58 million a year ago. Goldman calculates its VAR differently, but the trend is the same. Its measure was $127 million, up from $106 million and $92 million respectively. This has historically been one reason why broker-dealer PEs tend to be low and a big reason why analysts have a rough time with estimates. If the market ever starts disregarding this issue, you can conclude that the buying may be overdone.

For more:
- here's a Forbes article

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