Why Goldman Sachs earnings weren't all that: trader

Goldman Sachs
Adam Jeffery | CNBC

Goldman Sachs said Tuesday its quarterly profit doubled thanks to strong trading revenue, but the news left at least one Wall Street professional unimpressed.

Goldman's investing and lending segment, which tracks its investments in private equity deals, publicly traded stocks, loans and bonds, produced nearly seven times as much revenue in the second quarter as in the same period last year, much more than analysts expected.

(Read More: Bank boom continues: Goldman Sachs profit doubles)

But to Larry McDonald, head of global strategy at NewEdge, Goldman is only a winner on the trading side because it has the most exposure to trading. McDonald noted that investment banking and trading accounts for some 78 percent of Goldman's risk-related assets, compared to just 30- and 6-percent at rivals JPMorgan Chase and Wells Fargo respectively. Following the financial crisis, most big banks have shied away from investment banking, but McDonald noted Goldman thrives and continues to thrive in risk-on environments.

Goldman's results may have improved but that's compared to a really crummy second quarter last year, McDonald said.

"Their investment-banking side, they absolutely killed it. It was a home run. But you have to remember, a lot of their comps are versus second quarter of 2012," McDonald said. "As we recall, that was the quarter that Greece threatened to leave the euro zone. So it was just the easiest comp in the world, so that's why a lot of these numbers look pretty good."

(Read More: Second quarter not such a great one for Goldman)

McDonald recommends selling financials at current levels, particularly given potential headwinds out of Europe.

—By CNBC's Drew Sandholm. Follow him on Twitter @DrewSandholm

.—CNBC's Michael Newberg and Reuters contributed to this report.