Goldman Stockholders - What Chumps

What group of hedge fund investors pay their managers 50% of profits? Goldman (GS) stockholders, that's who. Over 50% of the profits generated at Goldman come from the employees' use of the stockholder's equity capital. The other 50% comes from leveraging the Goldman brand name to provide services like M&A advisory, IPOs, Prime brokerage, etc. And yet, the employees have convinced the stockholders that they are darned lucky to have them.

What chumps the stockholders are. If these people were risking firm capital and didn't enjoy the Goldman moniker, it would be called a hedge fund, and they would be paid 20% of profits plus 2% of equity assets under management. At Goldman, it's 50%. On the other services side of the firm, I assure you that the people running these businesses would be nowhere near as successful if they didn't have Goldman Sachs on their business cards. Yet, the stockholders still pay them 50% of the profits.

Goldmans return on equity has plummeted in the past year and was only as high as it was in the past due to excessive leverage and risk taking. For the employees, it is the classic heads I win, tails you (the stockholder) lose. Who wouldn't want to work there with such chumps for owners?

Comments

[TradingHelp...:]

It is this type of financial insanity; speculation with cheap money, fat bonuses and arrogance that prompted Matt Taibbi to describe GS as a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

Still rings true I think.

Oct 26 11:40 AM

[jimmy46:]

I knew that the day they had their IPO,

The wonder is that so many people still don't get it.

A sucker is still born every minute.

Oct 26 12:28 PM

[donzoab:]

The only chumps are the ones that didn

Oct 26 12:36 PM

[Micusando:]

Yeah, I feel like an idiot. My GS shares have gone from $60 to 185 in a few months. How could I be such a "chump"?
Thanks for this notification.

Oct 26 12:40 PM

[Jasper M:]

On Oct 26 12:40 PM Micusando wrote:

> Yeah, I feel like an idiot. My GS shares have gone from $60 to 185
> in a few months. How could I be such a "chump"?

And did you Sell them yet?
"Call no man happy that is not dead".

Oct 26 12:43 PM

[builder973:]

Dear bozo,

This is called capitalism. They pay people what they pay them. When the people don

Oct 26 12:52 PM

[Nadia Kageff:]

I took hold of my own Finances, I'm not paying any broker or fund any management fees. I am growing my own diversified fund of stocks.
I pay my own bonuses. The only person who will get rich on my own money is "moir". I'm do my own homework. If you are lazy, then pay a broker his fee.DuH!

Oct 26 01:00 PM

[builder973:]

This is called capitalism. They pay people what they pay them. When the people don't perform they don't get paid. When the organization does poorly the stock falls and many of their options go down in value significantly. By the way, did Buffett and the government make any money off Goldman's profitability? DUHHHHHHHHHHHHHHHHHH?

If you need a wake up call how about checking in with your favorite money wasters, the Congress. I am trying to recall whether any of them ever got a pay reduction when they didn't perform. They piss away more money than anyone I know of with absolutely no consequences.

Have a great day.

Oct 26 01:09 PM

[Nadia Kageff:]

P.S. Are you taking off from the top some of the profit?
Like Cramer says " play with the house money, every once in a while
shave off at liest 25% of winnings. Start to accumulate some for your next big win. This is not a long haul market.

Oct 26 01:10 PM

[Big Papi:]

All that "excessive" risk taking at the equity holders stake sure has been evident, I mean they filed for bankruptcy right? Wait that was Lehman. But they had to be bought out at least? No, no that was Merrill and Bear Stearns. But I'm sure it had nothing to do with "the people running these businesses" who "would be nowhere near as successful if they didn't have Goldman Sachs on their business cards." That Warren Buffet sure is a sucker.

Oct 26 01:22 PM

[Juliet:]

Ah yes, it is so nice through all of this to experience the uniquely warm and fuzzy feeling of the BRK shareholder...

Wasn't that about $1,000 a minute on preferred stock investments?

Thanks, Warren.

Oct 26 02:18 PM

[saintshawn29:]

Might want to check out your math on % of profits...not even close to 50% from their "brand name" :)...

Oct 26 07:04 PM

[Micusando:]

Yes, I have taken out my initial investment. I'm playing with house money (that has doubled). I'm not dead, and I'm happy.


On Oct 26 12:43 PM Jasper M wrote:

> On Oct 26 12:40 PM Micusando wrote:

Oct 28 12:25 PM

[Marc Michel:]

So you'll be buying more at 185 I guess.


On Oct 26 12:43 PM Jasper M wrote:

> On Oct 26 12:40 PM Micusando wrote:

Oct 28 08:44 PM