If you think about Governments around the world, when they need to raise money, they often turn to Goldman Sachs, because they do a very good job. If you raise money for governments, large institutions are not far behind and how the company is doing is a measure how corporate America is doing.
In an article by Anirban Sen and Elizabeth Dilts Marshall of Reuters, Goldman reported for the quarter but expenses were up so profit expectations were missed. In 2017, Goldman said it wanted to increase its revenue by $5 billion every year. Most people know if you want to increase revenues, often expenses increase but not necessary profitability. Goldman has spent more on compensation, technology, occupancy costs and professional fees and its operating expenses went up 42% or for every dollar of revenue it produced in 2019, the company spent 68 cents, up from 64 cents the previous year. This management of Goldman is going to cut expenses.
3 out of 4 Goldman’s business units reported better quarterly results. Global markets which houses the trading businesses was up $3.5 billion in revenue or up 33%.
Investment banking was down 6% or $2.1 billion. Private banking was up. In 2018 Goldman made $2.3 billion or $6.04 a share, in 2019 the corresponding numbers were $1.7 billion or $4.69 a share. Analysts were expecting $5.47 a share.
Linking to dividend paying stocks, for a company similar to Goldman the only concern is how much profit they will make, not will they make a profit. All markets are competitive, but each company will have its market reach to ensure they make a profit. If the company is consistently making profits, as a investor all you have to decide is are they meeting your expectations. If the company is coming to do well and easily paying its dividend, then you can hold on your shares as you do your research if you were to sell what would be the better alternative? Nothing, do nothing.
There are more questions than answers, till the next time – to raising questions.