Why I would never invest in Goldman Sachs
Many people consider Goldman Sachs a real premier "blue chip" company. While I never say never, I never have and (probably) never will invest in its stock. And no, it's not because I'm disgusted with their recent (not to mention their past) behavior in paying out huge bonuses to their employees while many of us are unemployed and pinching pennies. That would be a form of envy, and envy's a bad thing. If someone does better than I, even if it's due to pure luck, I'm not going to get sucked into being resentful or envious. Ultimately, envy is a sin and my soul is too important.
Of course, the recent payouts Goldman employees have enjoyed, the 2008 and 2009 "bonus pools" that were and will be distributed, were supported by us taxpayers. I hope you realize that. Goldman took advantage of government subsidies that "saved" it and many other large "too big to fail" institutions in 2008 and 2009. On top of that, Goldman and few other big investment banks were paid out 100% on contracts with AIG, even as AIG was itself bailed out by the government - i.e., us, the taxpayer. So they doubly benefited from us taxpayers - we same taxpayers who've lost our jobs and are pinching pennies.
I submit that it is by no means a matter of envy or even resentment to take the position that you want nothing to do with an institution that operates this way. In this case, the institution functions and prospers not as much because of the skill and hard work of their employees, but because of they are on a list of "preferred" institutions that the Federal government has designated to receive special privileges at the expense of the taxpayer. You could certainly understand it if I took the position that, on principal, I wouldn't invest in their stock.
Of course, that would be more a matter of catering to either certain feelings or perhaps even righteous indignation if I decided not to invest a penny of my hard-earned money with such an institutions.
But I think there is a simple objective reason not to invest with these people, and it's driven by my desire to invest in companies that treat me, the shareholder, well. Goldman doesn't. This year is a perfect example of this.
This year, Goldman will be paying out about 70% of its profits to its employees. Only 30% of its profits will go to its shareholders. The traditional ratio of payouts to employees of big investment banks is around 50%. I'm sure that Goldman considers its employees the cream of the crop and therefore deserving of this special treatment.
Goldman recruits and hires the best of the best. That's their reputation. In many ways it's deserved. I know first-hand. In the past, I worked with a number of their people, including some of their top investment bankers, analysts and senior executives, when I worked at a large financial institution. I've seen these people up close and I know that they're smart and quite dedicated to, well, making money. They do indeed work long hours, work very hard, etc., etc.
But as a shareholder, I want to be treated fairly. And Goldman giving its employees a chunk of money rather than paying out profits in dividends or used, for example, to buy back its stock, increasing the chance that its share price will go up (although I'd prefer they pay me the dividend), is not a good deal in my mind.
So, with not a trace of envy or resentment, without needing to take a "moral" stand in the matter, I, a potential investor in Goldman Sachs stock, have never, do not now, and (probably) will never direct any of my hard-earned money to the purchase of their stock, nor would I ever lend them money by buying their bonds.
Then again, never say never.
Of course, the recent payouts Goldman employees have enjoyed, the 2008 and 2009 "bonus pools" that were and will be distributed, were supported by us taxpayers. I hope you realize that. Goldman took advantage of government subsidies that "saved" it and many other large "too big to fail" institutions in 2008 and 2009. On top of that, Goldman and few other big investment banks were paid out 100% on contracts with AIG, even as AIG was itself bailed out by the government - i.e., us, the taxpayer. So they doubly benefited from us taxpayers - we same taxpayers who've lost our jobs and are pinching pennies.
I submit that it is by no means a matter of envy or even resentment to take the position that you want nothing to do with an institution that operates this way. In this case, the institution functions and prospers not as much because of the skill and hard work of their employees, but because of they are on a list of "preferred" institutions that the Federal government has designated to receive special privileges at the expense of the taxpayer. You could certainly understand it if I took the position that, on principal, I wouldn't invest in their stock.
Of course, that would be more a matter of catering to either certain feelings or perhaps even righteous indignation if I decided not to invest a penny of my hard-earned money with such an institutions.
But I think there is a simple objective reason not to invest with these people, and it's driven by my desire to invest in companies that treat me, the shareholder, well. Goldman doesn't. This year is a perfect example of this.
This year, Goldman will be paying out about 70% of its profits to its employees. Only 30% of its profits will go to its shareholders. The traditional ratio of payouts to employees of big investment banks is around 50%. I'm sure that Goldman considers its employees the cream of the crop and therefore deserving of this special treatment.
Goldman recruits and hires the best of the best. That's their reputation. In many ways it's deserved. I know first-hand. In the past, I worked with a number of their people, including some of their top investment bankers, analysts and senior executives, when I worked at a large financial institution. I've seen these people up close and I know that they're smart and quite dedicated to, well, making money. They do indeed work long hours, work very hard, etc., etc.
But as a shareholder, I want to be treated fairly. And Goldman giving its employees a chunk of money rather than paying out profits in dividends or used, for example, to buy back its stock, increasing the chance that its share price will go up (although I'd prefer they pay me the dividend), is not a good deal in my mind.
So, with not a trace of envy or resentment, without needing to take a "moral" stand in the matter, I, a potential investor in Goldman Sachs stock, have never, do not now, and (probably) will never direct any of my hard-earned money to the purchase of their stock, nor would I ever lend them money by buying their bonds.
Then again, never say never.
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