Morgan Stanley's big one-day loss: $395 million!

According to a recent SEC filing, Morgan Stanley's quant traders lost a cool $395 million in a single day in August. Ouch. That's got to be some sort of record. Goldman Sachs also got hit by the volatility. In six trading days, it lost more than $100 million. Those losses were more than offset. However, by a gain of more than $100 million on 23 days. The Financial Times notes that these disclosures help explain their 3Q performances. Morgan lost $480 million from quant-style trading, while Goldman Sachs posted a surprising gain that it said was due to timely hedges. The filing shed some, but not a lot, of light on its techniques, which have been the topic of some debate. Goldman bet against various mortgage-related indexes and made bets in the credit default swap market. The real message here is that there is a fine line between huge gains and losses, which is precisely why the market grants these firms such low multiples.    

For more:
- here's the FT article