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Strictly looking at EPS Yes.
They are the most successful because they're the most conflicted bank on the street and screw their clients. My 2c.
From Adam The Analyst re: Abacus CDO:
GS MD: What is our motto?
GS Analyst: Our clients come first.
GS MD: And who is our client?
GS Analyst: Mr. P. Paulson
x
^ This. Also their connections with the Fed / White House definitely helps. Also they're able to hire the best talent which makes them more successful, leading everyone to want to work there. Sort of a cycle that never ends.
I'm not talking about the politics, prestige, and power. So strictly EPS is why GS is the most "successful" and "richest" bank? Hasn't JPM and C made more earnings over the years?
There are many reasons for this:
They struck a great balance between risky innovation (i.e. first major block traders) and following suit of other firms risky innovation once it proved stable (i.e. junk bonds/mortgage backed securities)
Tend to hire from top business schools rather than rival firms because of their "plasticity" and are better able to adopt the culture of GS.
Very culture oriented and collegiate atmosphere that focuses on being "long-term greedy" (i.e. john whitehead's 14 points). Being a partnership for so long allowed the firm to make more conservative decisions since there partners money was at stake and is embedded in the culture (however, this is not very apparent in todays world)
Very strong leadership (i.e. sidney and john weinberg, bob rubin, john whitehead, etc)
The idea of being a partner at the firm kept much of their top talent from moving to other firms even if they were offered higher pay (reduced management turnover)
Very strong connections with some of the biggest corporations around the world (sidney weinberg was on the board of over 30 companies at one time)
Last but not least, political connections. Sidney advised roosevelt during WWII, paulson and rubin were secs. of treasury, corzine was governor of jersey.
There are many other reasons for this such as innovation of sales techniques and pain-relieving PR machines but these are the main factors for their success. For further reading, i would suggest lisa endlich's culture of success and william cohan's money and power
tech investment, leadership, politics, the name itself snowballs into furthering the name... so many past politicians, lobbyists, washington employees have been GS employees... its all about connections and allows them to keep making more money
its also stuff like this... http://www.taipanpublishinggroup.com/tpg/smart-investing-daily/smart-in…
theyre usually a step a head of their competitors...
A lot of you make good points but I mean just look at 2010's earnings. JPMorgan for example made ~$17B, Goldman made ~$8B. Even Citi's earnings were higher. Maybe we're comparing apples to oranges b/c Goldman is a smaller bank in the sense they don't have retail/consumer banking and other misc divisions?
Dude, who cares about earnings? Unless you are a shareholder, what does it matter.
On top of that, JPM, Citi, and BAC are megabanks, with IB and S&T being only a smaller portion of their business. JPM and Citi are both heavily involved in treasury services and payments processing. The three mentioned also have credit card businesses, consumer loans, home loans, small business loans, etc. GS, MS etc are institutional investment banks, and thus don't compete in those markets. As a result, they are going to have completely different earnings. Take a look at other measures besides overall earnings, such as EPS, to compare. However, they are fundamentally different companies so comparing GS and JPM is sort of irrelevant (although more relevant than comparing GS with JNJ or someone).
Take a look at average revenue per employee or average earnings per employee, that is where the story is.
For example, Citi had 260k employees and Goldman had 36k in 2010.
LIBOR thank you for the clear up, that was the kind of answer I was looking for
Average/Median pay per employee
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