In the marketplace there are consumers, but consumers come in all shapes and sizes, they also can be segmented into individuals or institutional. If a business caters to institutional investors, they should have money to spend no matter what cycle the economy is in. If a business caters to the mass public, there will be more competition and people have to know the brand and the cost structure. Why would a typical consumer wish to do business with the company. The individual market and the institutional market are two very different markets and generally, depending on the company which division did the President and past President rise from, will tell you if the company is institutional or retail orientated. Sometimes companies want to do both.

In an article by Saeed Azhar and Lananh Nguyen of Reuters, Goldman Sachs held an investor day and if any company is considered institutional in nature, Goldman Sachs is one of them. The company makes money from its trading, advising governments and large companies around the world. For the past few years, it has wanted to gain access in the consumer business, but it loses money. According to David Solomon, the CEO, the bank is considering strategic alternatives for its consumer business after stumbles led to billions of dollars in losses.

The bank deals with high net value individuals and thought a consumer business was something they could do and gain market share in. The consumer division would be another leg in the Goldman business segments. The reality is in the credit card business, companies such as Capital One issue millions of cards to people, Goldman was not doing that.

Some of the consumer units have been merged into the asset and wealth management. The company said sometimes we fall short, sometimes we do not execute. But we always learn and adapt..

Dan Dees, co-head of global banking and markets, said the division was targeting returns in the mid-teens. One of its priorities is financing across equities, fixed income, currency and commodities. The share of financing has already grown to 22% of revenue last year from 12% in 2013.

The bank expects a return on tangible equity of 15 -17% throughout the cycle with room to grow.

Linking to dividend paying stocks, when companies make money, they think they examine their competition to see why they make money and duplicate it. Sometimes they can, sometimes they cannot for example the big New York banks have branches which bring in low-cost deposits. Lending the money at higher rate as long as loan losses are kept to a minimal amount will make profits for the bank. It is hard to duplicate the success without access to many branches in a reasonably stable part of the economy of the country. The strength the company has it makes money and can try many strategies, some will work, some will not. Institutional players should stick to institutional clients because the decision-making process is different than catering to the mass markets. If one of your investments is moving to different segments ask why?

There are more questions than answers, till the next time – to raising questions.