When you think about the big trading houses on Wall Street, the firm Goldman Sachs comes to the list because they do an excellent job of making money through all types of markets. When the markets were not doing well, everyone thinks Goldman Sachs is rigging the market for themselves, when the markets are rising they do even better. The company is not perfect, it was sued and lost a Malaysia’s law suit but the company continues to power on.
In an article by Anirban Sen and Matt Scuffman of Reuters, Goldman reported a 4th quarter profit powered by its trading desk and a surge in fees from underwriting a string of blockbuster IPOs.
Revenue from global markets which houses the bank’s flagship trading business had its best performance in a decade. Sales jumped 23% to $4.27 billion in the quarter or $21.2 billion for the year.
Total revenue climbed 18% to $11.74 billion. The bank’s net earnings applicable to common shareholders rose to $4.36 billion or $12.08 a share. Analysts were expecting $7.47 a share.
The bank’s trading desk generally works with governments and large institutions but the company is setting up a consumer loans and credit card business. The business rose 52% to $347 million or $1.21 billion a year. The bank generates most of its profits from the trading desk.
Linking to dividend paying stocks, traders like active markets and if there are rising active markets they like it better because there are even more profits to be made. IPOs from companies help generate fees, the company invests more in AI and finds areas to make money. Goldman has been a leader on Wall Street and continues there, while they are the leader it is safe investment to make in their stock. If your companies you invest in are leaders in their fields, the important question is are they still the leader, if they are you can hold, if the leadership is falling it is time to look for alternatives.
There are more questions than answers, till the next time – to raising questions.