This isn't to say that Goldman is always the best. For smaller deals, you will generally get better execution from someone else (since it's not worth it for Goldman to spend a lot of time on it or put their best team on it if they're not going to make much money). Also for particular industries or particular situations, other firms are often better. If you look at the league tables showing which firms executed the most deals, you will see very different rankings by industry, and often Goldman is not in the Top 3.
Also in most instances, the clients' and Goldman's interests are not in conflict. If I were to hire them to run a bond deal, they are incentivized in many different ways to get my best outcome. Of course, Goldman will try to use any information they gain to make money elsewhere. For example, if I am having them lead an offering for an automotive company, and they see indications from my company that auto demand is softening in ways that the rest of the market has not realized, they can pass this information onto their trading desk, which can try to find ways to make money off of this (maybe by shorting an index of auto stocks) - all of which is perfectly legal. But this doesn't really impact me as long as they execute my deal.
I don't work with their asset management group (which manages money for pension funds and wealthy individuals), but it tends to have a decent reputation, at least in comparison with the rest of the industry. A lot of their clients are wealthy individuals across the country and I would suspect that the recent events have hurt this division more than others, since the Goldman brand/reputation is a big reason people invest with them. I looked at their 10K and pre-tax income for asset management only increased from $934m in 2009 to $963m in 2010 despite a big run up in asset prices, so it would seem they have lost some clients. But less than 10% of Goldman's pre-tax income comes from asset managent so it's not a big driver of profitability.
Jay
On Sun, May 22, 2011 at 7:41 PM, <123hop at comcast.net> wrote:
>
> I do understand that the govt is shy about prosecuting Goldman. What I don't get is how they're still in business.
>
> I mean, what events continue to show is that Goldman is perfectly willing to screw over its clients in order to make big bucks for themselves. So why would you want them to invest your money? I mean if I were a gazillionaire, I wouldn't trust Goldman.
>
> One possibility, say for pension funds, is that Goldman is bribing those who manage those funds to entrust them with investment strategy because, after all, why would pension fund managers necessarily care that the funds become depleted or bankrupt....so long as they get their bonuses and golden parachutes. But Goldman has screwed real customers whose real businesses have gone bankrupt and whose CEO's were left with nothing....so....?
>
> Anybody know? What am I missing here?
>
> Joanna
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