11/15/11

Goldman Sachs, the infamously glorified work place of almost everyone here, cannot seem to break any good news into the media. Of course, GS is known to have the brightest people and as much prestige as English royalty. Nonetheless, I will one up Meredith Whitney and claim that Goldman's greatness is slowly coming to its knees. With only three resounding reasons to back my foresight, I am eager to hear your rebuttals:

1) As Dealbook reported last evening, about a dozen partners have put in their notice to retire from the firm- an unusually large number indeed. As widely speculated, these partners appear to be leaving in order to ensure that their severance packages will get paid in full while there is still some cash left in Goldman's bank. In an effort to drastically cut costs, Goldman was already expected to let go about 10,000 employees by 2012. Recently, internal reports are signaling that layoffs might be further upped. With more layoffs on the horizon, one can only assume that its once incredible talent pool is grossly shrinking.

2)Last quarter, GS reported a $400 million plus loss, the first posted loss since 2008. The Volcker Rule alone is supposed to cost about $1 billion for banks next year, and obviously, GS will be apart of those losses. Along with regulatory uncertainty, I just have to imagine there is no one left in the world for GS to fuck and profit off. YTD GS is down 67%, and unless Merkel can pull out an epic miracle, the broader financial industry along with Goldman will only continue to tumble.

3)The bank is hugely vilified as one of the most symbolic figures of corporate greed of our time. With six Gulfstreams sitting in a New York hangar at any given time and a lavish corporate headquarters in New York, I keep picturing the gaudy office space Salomon Brothers built in London prior to their collapse. Between the GSelevator Twitter and Greece claiming that Goldman helped them cook their books, I cannot think of a more deserving ensemble of all this media disgrace.

Oh, how the mighty have fallen.

Comments (44)

11/15/11

And with all that being sad, I would still gladly work there.

"Look, you're my best friend, so don't take this the wrong way. In twenty years, if you're still livin' here, comin' over to my house to watch the Patriots games, still workin' construction, I'll fuckin' kill you. That's not a threat, that's a fact.

In reply to Will Hunting
11/15/11
Will Hunting:

And with all that being sad, I would still gladly work there.

^ this.

Man cannot remake himself without suffering, for he is both the marble and the sculptor. -Dr. Alexis Carrel

In reply to Will Hunting
11/15/11
Will Hunting:

And with all that being sad, I would still gladly work there.

ditto

Get busy living

In reply to Will Hunting
11/15/11
Will Hunting:

And with all that being sad, I would still gladly work there.

Me as well.

In reply to Will Hunting
11/15/11
Will Hunting:

And with all that being sad, I would still gladly work there.

<3 GS

;)

11/15/11

I really hope GS doesn't die because GS Elevator is a big part of my day.

You're born, you take shit. You get out in the world, you take more shit. You climb a little higher, you take less shit. Till one day you're up in the rarefied atmosphere and you've forgotten what shit even looks like. Welcome to the layer cake, son.

In reply to Nefarious-
11/15/11
Nefarious-:

I really hope GS doesn't die because GS Elevator is a big part of my day.

This.

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee

WSO is not your personal search function.

11/15/11

with all that said i might still gladly work there......i'm already at a prestigious bulge bracket so depends on the position :)

Beast

11/15/11

all a ploy to go back into hiding; Goldman will never die!

11/15/11
In reply to WallStreetOasis.com
11/15/11
WallStreetOasis.com:

good time to buy the stock?

based on point #1 seems like it might be a good time to short it instead. That many people walking away seems like a sex scandal or they know something everyone else doesn't.

11/15/11

Goldman is like the Yankees.

Sure they are hatable and portrayed as dubious, but you would love having them on your side.

Once banks and Europe stop being on TV 24/7 I think things will look up for them PR wise.

In reply to nate2284
11/15/11
nate1749:
WallStreetOasis.com:

good time to buy the stock?

based on point #1 seems like it might be a good time to short it instead. That many people walking away seems like a sex scandal or they know something everyone else doesn't.

http://dealbook.nytimes.com/2011/11/14/a-wave-of-p...

Article made it sound like they were victims of cost-cutting and the general shrinkage in headcount. As the article describes, low-performing partners are culled to make room for new ones and keep the size of the partnership pool down. "Retiring" doesn't actually mean they chose to leave...it's probably a euphemism for being forced out nicely.

11/15/11

I wouldn't work at GS

winky

11/15/11

^^ Thats what I thought when I saw this. If a bunch of junior guys are leaving, a few senior ones will have to as well. Besides, goldman will eventually shed "bank holding company" status so the Volcker rule wont apply.

Leadership can be defined in two words: "Follow Me"

In reply to houseofcards
11/15/11
houseofcards:
nate1749:
WallStreetOasis.com:

good time to buy the stock?

based on point #1 seems like it might be a good time to short it instead. That many people walking away seems like a sex scandal or they know something everyone else doesn't.

http://dealbook.nytimes.com/2011/11/14/a-wave-of-p...

Article made it sound like they were victims of cost-cutting and the general shrinkage in headcount. As the article describes, low-performing partners are culled to make room for new ones and keep the size of the partnership pool down. "Retiring" doesn't actually mean they chose to leave...it's probably a euphemism for being forced out nicely.

Bingo. GS periodically goes through these phases and alwas pulls through just fine.

Get busy living

11/15/11

What were people saying about Drexel or Solomon Brothers, right before they went under? It IS possible for the most cagey, ruthless bank to go under. We have seen it a few times before.

11/15/11

Well if they are politely forcing an above average amount of people out, wouldn't that mean that an above average amount are underperforming?

Either way - forced out or leaving on their own good will - a short seems like it holds more water presently.

11/15/11

I think the best bet for Goldman is to take themselves fully private again so they can increase risk and leverage more.

In reply to brooksbrotha
11/16/11
brooksbrotha:

I think the best bet for Goldman is to take themselves fully private again so they can increase risk and leverage more.

If they do that, when it all goes wrong - as we know it eventually will - they won't get a bailout...

11/16/11

Fuck Goldman, that what IBs get for only recruiting at Iveys hope they all die.

In reply to Nefarious-
11/16/11
Nefarious-:

I really hope GS doesn't die because GS Elevator is a big part of my day.

+1 SB. Couldn't agree more, haha. Literally 50% of all my Tweets are just RTs of GSElevator, that guy is the new LSO.

In reply to Will Hunting
11/16/11
Will Hunting:

And with all that being sad, I would still gladly work there.

Doubt you'll get the job because of lack of attention to detail.

-1.

In reply to blastoise
11/16/11
blastoise:

Fuck Goldman, that what IBs get for only recruiting at Iveys hope they all die.

Incorrect...

In reply to blastoise
11/16/11
blastoise:

Fuck Goldman, that what IBs get for only recruiting at Iveys hope they all die.

Incorrect...

11/16/11

Any thoughts as to which will be the 3 most prestigious banks 10 years from now?

In reply to gubbier
11/16/11
gubbier:

Any thoughts as to which will be the 3 most prestigious banks 10 years from now?

Salomon Brothers

"For I am a sinner in the hands of an angry God. Bloody Mary full of vodka, blessed are you among cocktails. Pray for me now and at the hour of my death, which I hope is soon. Amen."

In reply to duffmt6
11/16/11
duffmt6:
gubbier:

Any thoughts as to which will be the 3 most prestigious banks 10 years from now?

Salomon Brothers

MF GLOBAL

Get busy living

In reply to UFOinsider
11/16/11
UFOinsider:
duffmt6:
gubbier:

Any thoughts as to which will be the 3 most prestigious banks 10 years from now?

Salomon Brothers

MF GLOBAL

Barings

In reply to milehigh
11/16/11
milehigh:
UFOinsider:
duffmt6:
gubbier:

Any thoughts as to which will be the 3 most prestigious banks 10 years from now?

Salomon Brothers

MF GLOBAL

Barings

1640's era Dutch man: The bank of Amstredam. What could go wrong?

"...all truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident."

- Schopenhauer

In reply to gubbier
11/16/11
gubbier:

Any thoughts as to which will be the 3 most prestigious banks 10 years from now?

Maybe a good guess would be Perella, Lazard, and Evercore.......

or GS, MS (after giving up bank holding statis) and Merrill post BAML split?

"One should recognize reality even when one doesn't like it, indeed, especially when one doesn't like it." - Charlie Munger

11/16/11

Goldman is having a tough time securing top talent at b-schools these days. Most of the rock stars who would have likely headed to GS in years past are now heading to Evercore, Perella, and the like. Every dog has its day, Goldman had a great run while it lasted, but their moment in the sun is turning to a close.

Sort of like Brown Brothers Harriman a century ago, and now you never even hear of them. Seems like to many people fail to understand that past results are not an indicator of future results. Wayne Gretzky once said that he tried to skate to where the puck was going to be, rather than where is was . . . . sounds like he had the right idea.

In reply to B-School Bound
11/16/11
B-School Bound:

Goldman is having a tough time securing top talent at b-schools these days. Most of the rock stars who would have likely headed to GS in years past are now heading to Evercore, Perella, and the like. Every dog has its day, Goldman had a great run while it lasted, but their moment in the sun is turning to a close.

Sort of like Brown Brothers Harriman a century ago, and now you never even hear of them. Seems like to many people fail to understand that past results are not an indicator of future results. Wayne Gretzky once said that he tried to skate to where the puck was going to be, rather than where is was . . . . sounds like he had the right idea.

Goldman makes the majority of its money from trading not banking...any monkey can model DCF..not every monkey can take a pile of cash and make it grow

11/16/11

Perella Weinberg ... pretty ingenious how they created a natural hedge with their M&A + financial restructuring groups. Look at some of their clients. Some big time names on that list.
http://www.pwpartners.com/Advisory_transactions.aspx

Here's the thing. If you can't spot the sucker in the first half hour at the table, you are the sucker.

In reply to Bernankey
11/16/11
Bernankey:
B-School Bound:

Goldman is having a tough time securing top talent at b-schools these days. Most of the rock stars who would have likely headed to GS in years past are now heading to Evercore, Perella, and the like. Every dog has its day, Goldman had a great run while it lasted, but their moment in the sun is turning to a close.

Sort of like Brown Brothers Harriman a century ago, and now you never even hear of them. Seems like to many people fail to understand that past results are not an indicator of future results. Wayne Gretzky once said that he tried to skate to where the puck was going to be, rather than where is was . . . . sounds like he had the right idea.

Goldman makes the majority of its money from trading not banking...any monkey can model DCF..not every monkey can take a pile of cash and make it grow

If you have read any of the recent quarterly filing you would have noticed that their income from trading has been dropping at an alarming rate. As folks leave, they take intellectual capital with them, and then they knock you off. GS is rapidly falling towards the point where their trading units' return on capital will be equal to or less than their cost of capital. Not really a winning recipe.

Twenty years ago GS had 2,000 in head count. The guys who made the big bucks are the ones who grew the firm and then sold it to the public. Most of the partners did not make their money in salary, they made their money by monetizing their partnership. The real money will always come from growth, find the growth shop, and jump on that wagon.

In reply to B-School Bound
11/16/11
B-School Bound:

Most of the rock stars who would have likely headed to GS in years past are now heading to Evercore, Perella, and the like.

GOOD, less competition for me. I see the boutique fad passing within a decade and only a few hardcore veterans really lasting in their current capacity...like Lazard and Rothchild. A lot of people who go to these places are infatuated with the high profile of certain units or are just chasing a trend, but they don't realize that these firms do not have the same brand name recognition outside of the industry.

Some of the MMs may move into the bulge category, but more likely they'll stay where they are or be aquired when the partners want to cash out. The boutiques at best are merely filling in the voids created by the recession and the current regulatory environment and are more likely to revolve around a handful of people [Perella, Moelis, etc...] than have any real brand. Rest assured that the bigger banks will regain their dominance after this period of time: I'm inclined to think that GS will be among those that emerge...but I could very well be wrong.

FOR THE RECORD, I'm at a MM and happy there...I don't want to be misunderstood as hating on smaller firms, as they have a lot of upsides. But if I ever leave the industry for a different field or start a business, BB alum networks will be far more useful than the limited body count (and purse) of smaller firms. If I'm still in finance in a decade, someone shoot me.

Get busy living

11/16/11

GS to go under? Unlikely. They have such a huge pile of cash that you will see many other banks fall before they do.

In reply to RufioandHook
11/16/11
RufioandHook:

What were people saying about Drexel or Solomon Brothers, right before they went under? It IS possible for the most cagey, ruthless bank to go under. We have seen it a few times before.

sweet username

In reply to cplpayne
11/16/11
cplpayne:
gubbier:

Any thoughts as to which will be the 3 most prestigious banks 10 years from now?

Maybe a good guess would be Perella, Lazard, and Evercore.......

or GS, MS (after giving up bank holding statis) and Merrill post BAML split?

FALSE. The most prestigious bank is going to be Moelis Quattrone & Co.

You'll see...

11/17/11

http://seekingalpha.com/news-article/2053402-miche...

This, if anything, is what speaks most poorly of Goldman Sach's future fortunes. Burns has got a great resume, but real performance is something else entirely. Is this really the best they could do? Lots of very accomplished people must've turned down a Board seat. I've made a big loss on my GS shares and I was considering booking them after reading this. Maybe I still should.

As for the partners "retiring", I doubt it's the rats fleeing the Titanic, and more along the lines of them being pushed out. There's a lot of "pursuing new opportunities" going on with senior people at my firm, for example.

All this said, I agree with Illiniprogrammer: dropping bank holding status is what the big brokerages and IBs will most likely do, because I think the public at large simply won't stomach more privatized profits and socialized losses in high finance. Some form of Glass-Steagall reinstatement can be expected.

In reply to illiniPride
11/18/11
illiniPride:

^^ Thats what I thought when I saw this. If a bunch of junior guys are leaving, a few senior ones will have to as well. Besides, goldman will eventually shed "bank holding company" status so the Volcker rule wont apply.

Actually Dodd-Frank contains a "Hotel California" provision preventing any banks that took bailout money from shedding BHC status for regulatory purposes, even if they are no longer a BHC. Depending on how regulators decide to deal with it, they could be stuck with the Volcker rule forever.

11/18/11

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"One should recognize reality even when one doesn't like it, indeed, especially when one doesn't like it." - Charlie Munger

11/21/11

My drinkin' problem left today, she packed up all her bags and walked away.

In reply to Will Hunting
11/21/11

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