Goldman's traders are also notorious on Wall Street. After speaking to many people currently on Wall Street, it seems like the prevailing wisdom to explain this phenomenon is the fact that Goldman still has a "culture" behind it, whereas firms like Citigroup (NYSE: C) have destroyed the culture of once-notorious Solomon Brothers (think: Liar's Poker). Many of the firm's traders are "proprietary traders" which means they trade Goldman's own capital, whereas many "traders" at other big banks simply act as market makers, filling orders without much risk or the potential for significant profits. As a result of this prevalence of proprietary traders, many have began considering Goldman to be a hedge fund of sorts.

Goldman's management team and employee base is loyal, committed and aggressive. Its current CEO, Lloyd Blankfein, was a stellar trading before rising through the ranks of management -- he knows how to make money. The firm's employees are also noticeably loyal. While many i-bankers and traders routinely move around from bank to bank, Goldman employees tend to stick to Goldman unless they have a much greater opportunity, like moving to the buy-side or starting their own firm. But what's interesting about this is that many former Goldman employees turn to the firm for services such as prime brokerage, help in selling their new fund, and the like. As a result, when Goldman loses an employee it's usually not a true loss for the company.

Despite all these benefits, Goldman is still trading in-line with its industry -- JP Morgan (NYSE: JPM) trades for nearly 11x earnings, Goldman trades for 10x earnings, Merrill Lynch (NYSE: MER) trades for 9x earnings, Bear Stearns (NYSE: BSC) trades for 10.5 earnings and Lehman Brothers (NYSE: LEH) trades for 10x earnings. While this portrays the stock as being fairly-valued, I still consider the stock undervalued because I believe it's a much better company than the wide majority of its competitors.

But this story is still not without its risks because I believe the financials sector could come under pressure in the next couple of months. Investment banking fees are going to begin suffering as the private equity bubble begins wearing down and many firms might be forced to begin taking losses on "bridge loans" that they are offering private equity firms, and so on. Even if Goldman is not directly involved with these issues, the stock could still be hit if bad news begins surfacing throughout the industry. Therefore, it makes sense for investors to try and protect themselves, perhaps by purchasing December puts on the Vanguard Financials ETF (AMEX: VFH).

Although paying about the industry average for Goldman Sach's stock, investors are receiving far more than average. They are getting the most prestigious investment bank, some of Wall Street's best traders, and a large base of committed employees and former employees. Even though the stock is up big in the last year, it still has much more room to run.