Sometimes it appears that the bankers at Goldman Sachs (NYSE: GS) are much smarter than their counterparts elsewhere. Now, there is some fresh evidence that that is true. The firm bet that securities backed by risky home loans would drop in value. According to The Wall Street Journal, taking that position "generated nearly $4 billion of profits during the year ended Nov. 30." The paper says that a small number of bankers in a very small division of the bank made most of the investment that lead to the gain.
Clearly, the group did not share the information with many of the firm's clients, who gambled in the opposite direction and lost.
Investors have to wonder whether the people at Goldman drink different water or breathe different air. The investment bank is the only company in it peer group to have a stock that is up for the year. It has never been in any danger. One of its hedge funds, Global Alpha, did poorly and lost a great deal of money, but the rest of the firm was not affected.
Perhaps Goldman's uncanny ability to make the right call is why it is considered the world's premier investment bank.Trying to guess why that is true will never yield a real answer. Some observers say it is the "culture". Others say it is the way that bankers are hired and trained.
Not matter what the cause, it has made the firm and its shareholders a lot of money.
Douglas A. McIntyre is an editor at 247wallst.com.