Goldman Sachs’s exceptionalism takes another knock
By Antony Currie and Rob Cox
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
The exceptionalism of Goldman Sachs took another knock this week. For a brief period on Wednesday, shares of the Wall Street firm traded at a bigger discount to book value — or assets minus liabilities — than those of megabank rival JPMorgan. This rarely happens and suggests that investors fear the bank’s franchise, both as a trader of securities and financial adviser to corporations and governments, is somehow damaged.Read More...click here
Compared to other banks, Goldman historically commanded a premium valuation relative to its book value. That has traditionally given the bank a strong defense against critics of its business model, the assets on its books or indeed its management team. And for years this has mostly been deserved. For one, Goldman marks its assets to market prices more aggressively than rivals. Second, Goldman’s return on equity, a measure of its ability to make money above its cost of capital, usually has bested rivals.