Considered by many to be the profit and influence king among investment banks in modern times,Goldman Sachs was nonetheless subject to the same economic forces as everyone else in Q4 2011.The firm beat earnings estimates,but missed on revenue,or sales.Goldman's clientele is being cautious about investing and mergers and acquisitions in this difficult climate.
Trading and investment banking is down.It's not a good time to be an investment banker or trader,according to William D. Cohan,author of the well-regarded book "Money and Power:How Goldman Sachs Came to Rule the World."With the new rules,it's gonna be very tough to do business on Wall Street.
You're gonna get 5-8 years in the limelight at Goldman Sachs;then you're gonna be moved out for younger people.That's a good thing.
I think Goldman Sachs wants to be below the radar screen,not the whackamole.They want to get beyond being the poster child for bad behavior on Wall Street,Mr.Cohan observed.
With regard to the company's current perspective on equities,Dave Costin,Chief Equity Strategist at Goldman,says U.S. companies with the most exposure to the U.S. ought to outperform.It's one of our fundamental strategies for 2012.Consumer staples are what we prefer.Labor slack means little wage growth,hence poor discretionary spending.
Long term,two-thirds of corporate cash is reinvested in growth.In this environment,we're looking at 11% growth of dividends,Mr.Costin noted.
In other words,companies are plowing a lot of cash into dividends today to attract the skittish investors of these volatile times.It's why so many investment advisors are recommending the good dividend payers such as Procter&Gamble and PepsiCo to their clients.
Goldman Sachs(GS),Procter&Gamble(PG),PepsiCo(PEP)
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