Cramer on BloggingStocks: Street shifts to GS because it's a winner

Given that set of circumstances, why would you still keep your money at Merrill or Bear or Morgan Stanley? Why would you want to risk it? Why would you want the hassle?

What people may not realize is that one of the most lucrative businesses on Wall Street is prime brokerage, where you custody your account. The collateral is per se kept at the firm and the firm lends you money at a very good rate for the firm, no risk to the firm and lots of interest. Just a fantastic, high-margin business.

That business is going to Goldman Sachs (NYSE: GS) (Cramer's Take), which I own for Action Alerts PLUS.

How do I know this? I have so many sources on this that I am aghast that others don't get how important this all is. I can't believe that outsiders really don't value stability as much as they should because Wall Street is a relationship business and the relationships across the Street are being blown up left and right.

Except for Goldman.

There is also a perception in the press that Goldman has alienated customers with its being so right and with its great gains, the implication being that the gains come at the expense of the customers.

Again, wrong.

If you trade mortgages at Goldman, believe me, you have access to the very team that saved the firm from vicious exposure to this toxic product. I was always, as a client, able to speak to anyone. I know that you could have spoken to Mike Swenson, largely described as the guy who saw mortgages imploding. Who would not want that access? Who? But you have to do business with Goldman to get it. Fair, right?

Now, the real issue: Do you want to go deal with a company that goes hat in hand to the Saudis, to Dubai, to the Chinese because it needs capital, because it needs credit?

Or do you want to go with a company that has so much excess capital that it stands there and buys back its stock, something that will happen a few days from now after the inevitable insider selling -- lots of people there are paid with stock -- subsides?

I can't emphasize strongly enough that clients love to deal with companies that have risk controls and that think that it is fabulous to deal with winners.

Why doesn't the press understand it? Why don't the analysts understand it that well?

Two reasons: they have never been clients, and they have never had to cater to clients as salespeople.

Maybe that's why I have so much appreciation for Goldman.

I did both.


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• Cramer: My Vote's With the Candidate Who Talks Subprime
• Your House Isn't the Cash Cow It Once Was

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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Citigroup and Goldman Sachs.