In every industry there is a leader, and it always seems the leader has the breaks or beats expectations regarding its stock price. For the outsider looking in, it seems the company is well managed, profitable and it has the correct people in place no matter what the economic cycle. Then something happens and the stock begins to underperform and the questions about leadership surface. Eventually the person who everyone wanted in the top job, the differences come to light, is this the person to lead us?

In an article by Rob Copeland of New York Times News Service, the CEO of Goldman Sachs is a wonderful illustration of the above. Under previous management, Goldman Sachs was seemingly an advisor to every government in the world, its trading desk both for trading for Goldman and trading for outside clients was making lots of money, the new issue desk had many clients wanting to go public and the company stock was doing very well.

This year Goldman Sachs is not doing as well, the company tried to make money in consumer banking but has lost money. Trading activity is down on Wall Street which means layoffs have happened, the stock price is down and people look towards the CEO.

Every CEO has many positives and a few negative points, but the Board of Directors pick the CEO they believe will lead them well. When things are not going well, people look to the CEO for direction, but according to many, David Solomon does not have the personality which gains the loyalty and respect of his subordinates. If you are looking for a guy to pat you on the back, Mr. Solomon is not that guy, he is direct and focused on results.

Often times people will examine how the CEO spends his time outside of the day job. One of the things Mr. Solomon likes to do is be a DJ. He relaxes at private resorts owned by a company he has personally invested in.

Goldman is not likely to change its CEO for Mr. Solomon has held the job since 2018 and is the 10th CEO in 154 years. The CEO typically lasts for 15 years plus. As well as Goldman’s clients are still trading and working with Goldman.

Linking to dividend paying stocks, it is relatively easy to invest in a company when it seems it is the top company and has been for a number of years. As a top company, people say almost anyone could be the leader and the company would make money. It is never quite true for every profitable company needs to ensure the way it generates its profits continue and are consistent for the future. What services or products are profitable and who pays the bills? Having determined the answer you can determine will the people paying the bills continue? If the answer is a resounding yes, you can do nothing? if you are not positive seek alternatives.

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