Should You Invest in Goldman Sachs?

PHOTO CREDIT: Goldman Sachs

OVERVIEW

The Goldman Sachs Group Incorporation is a company based in the United States. The company offers a wide range of financial services to customers around the world. The company offers investment banking, global markets, wealth management, and asset management services to governments, corporations, and individuals around the world. The company was founded in 1869.

Why You Should?

  1. Goldman Sachs is a great reopening play in an investor’s portfolio. The pandemic reduced the demand for some of the company’s products as corporations around the world spend money to navigate through the pandemic. However, as these companies look to return to normal investment activities, it will benefit Goldman.
  2. Goldman Sachs, like many other banks, is an extremely profitable company. It makes the most of its profits through fees which the company charges for its investment and financial services. This business model has remained one of the most profitable in the world for quite some time now, something that has benefited the company and its investors.
  3. Goldman Sachs makes hundreds of millions (if not billions of dollars) through the underwriting process of taking a company public. As the IPO boomed over the past year, the company was behind some large deals (like the Rivian IPO coming later in the year). These profitable deals will benefit the company and its investors.
  4. Other than IPOs, the company manages a large value of assets for large corporations and governments around the world (over 2 trillion dollars). Some of these assets include sovereign wealth funds, pensions, and many others. The fees that Goldman receives to manage these assets are extremely high, something that has benefited the company’s results and its investors.
  5. As I mentioned before, Goldman Sachs makes the most of its money in the investment banking space. In this industry, the company raises money for other company’s (through both public and private market offerings) as well as managing assets for customers of all needs around the world. This industry continues to grow in value, benefiting the company.

Why You Should Not?

  1. The company faces tough competition in the financial and investment banking industry. Some of these competitors include BlackRock, Morgan Stanley, JP Morgan, and many others. This competition might hurt the company and its investors in the future.
  2. A negative political environment might hurt the company and its investors. As Biden looks for ways to pay for his massive government spending plans, he might look to significantly increase taxes on asset management and wealth individuals and corporations. This might hurt the company’s ability to gain new capital to manage, something that will also hurt investors in the company.

MY OPINION

I think that Goldman Sachs is a great long-term investment due to its position as a good reopening play, a profitable business model, the growing investment banking space, an IPO market boom, as well as large assets under management. However, tough competition and a negative political environment might hurt the company and its investors in the future.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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