For the past number of decades, the best and most profitable Wall Street firm has been Goldman Sachs. When there is a bull market, the money flows to Goldman, in a bear market they still make a profit. Goldman has many institutional and government clients across the world, if there is money to made in a country, Goldman is there.
In an article by Stephen Gandel of the New York Times News Service, Goldman Sachs reported its 2nd quarter profit falling 50% to $3 billion. Analysts were expecting a 60% fall or profit was better than expected.
Goldman’s executives said the bank was being cautious for the rest of the year and are reviewing stock buybacks but increased its dividend by 25%.
The bank recorded a 55% jump in 2nd quarter revenue from the buying and selling of bonds, currencies, equities and commodities.
In a bear market, there are fewer IPOs and revenue fell in the investment banking group, a drop of 41% from a year ago. The backlog of deals fell considerably, Goldman offered few details.
Linking to dividend paying stocks, a company such as Goldman Sachs makes money every quarter whether there is a bull or bear market, the issue is how much? If you own investments that make profits throughout the cycle you will be rewarded over the long term. There will be fluctuations in the stock price but profit making companies are good to hold on to and when the price is lower, more can be bought. If you are confident the company can make profits you can determine what is the company’s most important revenue source and when the company reports you will have your answer to hold or look for alternatives.
There are more questions than answers, till the next time – to raising questions.