Goldman Sachs' "Trading Desks Crush Expectations"

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April 14, 2022 by Matt McCracken

Goldman Sachs (GS) beat earnings expectations this morning by a wide margin.  The credit is being given to their trading desks as their Investment Banking revenue dropped over 30%.  An article appearing on CNBC.com states:

Goldman Sachs had been one of the biggest beneficiaries of a torrid two years of Wall Street deals activity, putting up record revenue figures and exceeding performance targets.

Down the street from Goldman, Morgan Stanley announced impressive earnings as well, again, due to stronger than expected revenue in their trading platforms.  Both GS and MS are up this morning.  And while both have seen declines this year in line with the banking indexes, they both continue to produce "eye-popping" profits quarter after quarter.  

But while GS and MS are generating big profits for themselves, what about their clients?  I assume some of their uber high-net-worth clients are sharing in the firm's riches.  But Main Street clients sitting in mutual funds run by GS and MS are getting decimated this quarter.  I ran through the list of funds run by both entities and it appears less than 3% of their mutual funds were profitable this quarter.  Here is a partial snapshot of each fund family's lineup. 

Goldman Sachs mutual funds performance Q1 of 2022

Morgan Stanley mutual fund performance Q1 of 2022

 

So, how does a firm generate massive profits for themselves but their funds are getting hammered?  Why aren't more people questioning this occurrence?  An occurrence that invariably takes place every time markets decline.  GS infamously made money in 2008 but none of their clients did.  Is it not painfully obvious that Wall Street firms are leveraging their authority over pooled funds for their own gain? 

I am continually amazed that investors allow their hard-earned savings to be decimated by Wall Street bankers who invariably use their authority to confiscate their clients' assets.  We take great satisfaction in being different.  In managing assets the right way, by aligning our objectives with our clients.  We invest right alongside our clients, never free-riding or front-running their accounts.  If you find yourself invested in mutual funds or other strategies that continuously underperform, give our market-beating strategy a look by clicking here.