On Monday, the Wall Street Journal reported that Goldman Sachs’ trading operation made money every single day last quarter:

Goldman Sachs Group Inc. traders didn’t lose any money at the end of each trading day during the first quarter, a first for the Wall Street firm, which typically loses funds on at least a handful of days in the period.

Traders raked in more than $100 million daily for 35 days and made no less than $25 million daily during the rest of the three-month period, according to a regulatory filing.

Bloomberg, of course, reported the same story, in pretty much the same way:

Goldman Sachs Group Inc.’s traders made money every single day of the first quarter, a feat the firm has never accomplished before.

Daily trading net revenue was $25 million or higher in all of the first quarter’s 63 trading days, New York-based Goldman Sachs reported in a filing with the U.S. Securities and Exchange Commission today. The firm reaped more than $100 million on 35 of the days, or more than half the time.

The Wall Street Journal and Bloomberg are arguably the biggest names in financial journalism. Yet neither article thinks to explain what these trading profits arise from. Inevitably, their readers went away with the entirely mistaken impression that Goldman Sachs had done a prescient job of doing what day traders do, consistently picking winners and losers by some process akin to witchcraft.

Nobody is supposed to be able to do this consistently in an efficient capital market (not even Goldman Sachs!).

It was Business Week on Monday which put these trading profits in their proper perspective:

Goldman Sachs reported yesterday that it made at least $25 million trading every single day of the first quarter, the first perfect quarter in the company’s history. The company’s fixed- income (sic), currencies and commodities businesses and equities unit generate those returns by making markets for clients rather than betting the firm’s own money, Chief Operating Officer Gary Cohn said today at a financial services conference in New York.

Market-making, of course, is an entirely different proposition from the frenetic buying and selling that day-traders do. Making a market in a given security means you facilitate transactions — providing liquidity, if you will — by buying at the bid and selling at the ask, and pocketing the bid-ask spread for your trouble.

Consistently making money at market-making is a very different proposition from consistently making money at day-trading.

I guess the moral of the story is you have to be careful who you get your financial news from. And just because you go with one of the market leaders in financial news doesn’t mean you’re going to get the right picture.