Reuters has taken a close look at Goldman Sachs's latest 10Q and come up with something interesting: Goldman reported a second-quarter net unrealized loss of $1.4 billion on its Level 3 derivatives. "The unrealized loss is significant because it represents a reversal of what had been a positive trend at Goldman." In the just prior quarter, Goldman Sachs reported a net unrealized gain of $975 million on its Level 3 derivatives. For all of 2008, Goldman reported a net unrealized gain of $5.58 billion. 

This may reflect Goldman's bet on various distressed assets, which seemed to pay off in 2008. But if it now finds itself on the wrong side of the market, we may have a reason to be slightly more cautious on Goldman's earnings in the second half of the year. We'll just have to see if this turns into a trend. 

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- here's the article

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