Scoreboard Media Group, Internet Audience Development

As I sit here writing this, millions of idiot CNBC viewers (and Rahm Emanuel) think the economy has turned a corner.  The market is up huge this week, mostly because Joe Arbitrary Citizen can’t read financial statements and the big institutional investors are all too happy to unload equities upon them. 

Whacking away payroll overhead back to profitability is not Seismic economic news.  9-15% of the population with no income, deflating prices, tons of debt, and little savings is not rebuilding the house of cards with a more formidable foundation.  It’s casting off the dead weight from the private sector onto the .gov’s books.

So, ranting aside, I’m up at this Godforsaken hour researching some put options and I see this Reuters news.  Somebody…allegedly an unknown high-frequency trading outfit named Goldman Sachs…agrees with me that the economy is still situated somewhere between the “in the fetal position listening to Sarah McLachlan” stage and  the “we’re all gonna die!” stage. 

The similarity stops there, though.  I’m just a lil’ Internet Marketing guy.  I do ah-ight, but apparently I need to create some sort of options or derivative product based on keywords or something.

Over at Zerohedge, a commenter took the time to explain what seems like a fairly mundane Reuters release, but really gets to the core of why Goldman Sachs continues to thrive when others are sitting on their thumbs:

“An institutional buyer bought 120,000 puts at $95 strike and sold twice (240,000) puts at $82 strike, both for december. This is a bear put spread, that the investor thinks that the SPY will be below $95, but hopefully above $82 by december.

I think he paid $5.3 for the $95 puts and received $4 ($2 times twice the volume) for the $82 put sold. His cost is $1.3 (5.3-4) X 120,000 puts X 100 (1 option = 100 shares) = $15.6 Million

If SPY is higher than $82 by 3rd week of December he than starts turning a profit at anything below $93.7 (95 - 1.3). If say SPY @ $85 in December profit would be $8.7 per option (93.7 - 85) X 12,000,000 shares (what 120,000 options represent) = $104.4 Million (not bad hehe) And then Goldman has best 3Q earnings, again, after stealing $104.4 Million from John and Bob who watch CNBC and want to get in this nice stock market rally.”

Their financial engineering makes my Paid Search > CPA Arbitrage look pretty f’ing rinky-dink.  Goldman’s willingness and ability to take risks while all the other financial houses are panicking is something we should appreciate, not demonize.  This trade is probably only one of a few dozen spreads hedged into what the single most profitable entity in this environment thinks is going to happen for the rest of the year.  If betting alongside Halliburton or Fannie Mae worked during the last bubble, it’s probably worth emulating Goldman as much as you can in this environment.

Anyways…not a search or internet marketing post, but I figured a few of you readers would appreciate a look into arbitrage and market intelligence of another sort.  I know things may be tough, but now is not the time to stop thinking BIG!

So, I had an awkward conversation late last week.  I have worked with two institutions that have taken TARP money (no need to run the, “Niiiiiiice, BP!  Way to bring down the economy”, takes).  One of those old legacy clients called me about doing an annual audit of their online search initiatives.  Towards the end of the call when I’m going over the fee estimate, I get the, “Let me run that by [her boss].  Due to compensation caps of executives here right now, we have also had to put in place controls against contractor expenses that would exceed those thresholds, too.”

Beautiful. If this turns out to be the case, we will have to part ways and then they can get some low-rent “Submit To The Top 1000 Search Engines” hack to help them pay taxpayers back. 

Anyone else run into this yet?

Update 4/14/09:  As pointed out in the comments, obviously I don’t bill $500k for an audit.  But there is, at least within this client’s business, a movement of executives considering switching to “contractor/consultant” status to get around the intent of the legislation.  Any consulting deals that bill above a certain rate are getting flagged.