What do Goldman Sachs sell?

Sigerson

Hi all,

I'm doing a economics project on Goldman Sachs for University.

One aspect of the company which I have to research is the company's Pricing Strategy. I've looked on their website and did a bit of a google search but I can't actually find for example, a service that they sell and the price that you would actually pay.

Does anyone have any idea what their pricing strategy would be or have any sources that I should look up?

Much appreciated,

D.

Amirani

Two main strands to Goldman's income - trading and fees and commissions. Their trading income will come from money made on buying and selling equities, fixed income, commodities, currencies, other derivatives etc. Fees and Commission income comes mainly from investment banking - underwriting and advising on IPOs, mergers and acquisitions etc. as well as wealth management for high worth clients - advisory fees, maintenance fees, commissions on returns etc.

This is quite different to your typical Irish or European bank, which would make most of their money from interest income on loans and fees on credit cards etc.

Sigerson

Amirani wrote: »

Two main strands to Goldman's income - trading and fees and commissions. Their trading income will come from money made on buying and selling equities, fixed income, commodities, currencies, other derivatives etc. Fees and Commission income comes mainly from investment banking - underwriting and advising on IPOs, mergers and acquisitions etc. as well as wealth management for high worth clients - advisory fees, maintenance fees, commissions on returns etc.

This is quite different to your typical Irish or European bank, which would make most of their money from interest income on loans and fees on credit cards etc.

Thanks for that, any idea on how they calculate their commissions or advisors fees?

Not sure where I could find this information.

For ever odd

http://www.goldmansachs.com/gsam/worldwide/kiids/index.html

A few funds/portfolios to get you started. % based fees from what I can gather.

For more information about charges, please refer to the Fund's
Prospectus, section entitled “Fees and Expenses” and the
relevant supplement for the Portfolio.

limerickgirl16

They are an investment bank so make money in a number of ways, as Amirani mentioned.

As for how they calculate their fees, it is not possible to give you a number (if that is what you are after). On the advisory side ( mergers and acquisitions, IPOs, bond issuance etc ) it's about competing with competitors. Some clients will accept a higher fee if they anticipate they are getting a better service ( Quite likely as GS is top tier ). Alternatively, they may be able to lower their fees below their competitors if they have some competitive advantage (like a technology backend that is cheap to run maybe)

On the trading side it's slightly different. Typically what happens here is the buy side ( pension/hedge funds ) go to a number of banks in the market and request for a quote ( ie how much to buy £1million of oil futures? [ I wont go into what this is, just accept it's a thing that's price changes with the price of oil ] ) Each bank then gives a price based on how much it will cost them to hedge that risk, ie if they sell oil to the hedge fund then the bank will need to buy that ( or something like that ) from somewhere else ( they are 'short' ) and it will cost them. Alternatively if they already had a lot of oil futures ( from an earlier deal possibly ) then they would be able to offer a better price because they have to get rid of them.

Waffled a bit there sorry. A quick google of 'How does an investment bank make money?' Will give you a good article, I would post a link but boards bans me from doing so until I have written 25 posts! #mean

Colonialboy

Read 'Why I left Goldman Sachs' by Greg Smith . Its not an academic tome or heavy on finance, its also a good read as a story

Not only will it teach you what you are looking for 'What do Goldman Sachs sell'
it will also give you broader eduction on many other aspects of finance, human nature, poitics and even some of the events around 2006 finance debacle.

Also you should research Goldman Sachs, 'bank holding companies' as well as Tarp bailout and Hank Paulson , not directly applicable to your OP but nonetheless educational.