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Has Goldman Sachs Gone Vampire Squid Again? Nah.

Friday, 1 Mar 2013 | 5:49 PM ET
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Today Goldman Sachs reported that it has dramatically reduced the risks it is taking, at least as measured by average daily Value at Risk, or VAR. Yet its in-house super bull is touting stocks.

Is this a problem? Well, it may raise eyebrows but it's probably not real evidence of anything nefarious.

On Friday, the Wall Street firm says its average daily VaR last year was just $86 million, a twenty-four percent reduction from the previous year. As Reuters says, this is the lowest VaR for Goldman in seven years.

Goldman watches VaR very closely. Arguably, you can conclude that when VaR falls to record lows this isn't because markets have simply become less risky. Goldman knows how to increase VaR if declining market volatility starts pushing it down. If VaR declines this means Goldman went risk off last year.

Or perhaps it means that Goldman's clients went "risk off." Keep in mind that Goldman insists it is trading for its clients. So its VaR should reflect what Goldman thinks its clients are doing, or going to do, rather than a proprietary position Goldman is taking. But since Goldman could, if it wanted to, take keep risk level ahead of client positions and still call it market-making, I'd say this is Goldman going risk off rather than something driven completely by client order flow.

Perhaps a bit awkwardly, this morning Abby Joseph Cohen of Goldman Sachs came on our air to reassure investors that the January-February stock market rally is real and based on fundamentals.

This was AJC doing her usual bullish thing, of course. And Goldman as a firm is under no obligation to follow AJC's advice. It would be rare for a global investment bank like Goldman to govern its investment strategy with the words of its research analysts. But AJC's stance does align awkwardly with Goldman's own risk-off move. If the market crashed, it would be easy to say that Goldman's talking heads were telling investors to go in one direction while the firm went in another.

At the heart of the accusation that Goldman is a blood-sucking tentacled beast is the idea that Goldman encourages bubbles so that it can profit when they burst. So its fair to wonder if Goldman is at least risking giving these accusations a new lease on life.

It should be noted, in Goldman's defense, that the VaR number disclosed today is backward looking. It's last year's VaR. For all we know, it could be much higher today.

Probably more importantly, the statements are not really inherently contradictory. If VaR drops because there is less volatility while stocks are generally rising, you can go "risk off" while making money buying stocks.

So, really, this shouldn't be seen as evidence of Goldman being a bubble machine.

Clarification: An earlier version of this story did not make it clear that Abby Joseph Cohen appeared on CNBC at our request.

Follow me on Twitter @Carney

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