Chapter 94 Section 2 Famous investment companies
When Microsoft was at its peak in 2000, no one could find a decent competitor for it.When the reporter asked Gates, who do you think is Microsoft's main competitor now, Gates replied that it was Goldman Sachs.Microsoft and Goldman Sachs are in different industries, and there is no competition at all, so the reporter was puzzled by Gates' answer.In fact, Gates was referring to the competition for talents, because at that time, only Goldman Sachs could compete with Microsoft in attracting talents and prevent Microsoft from hiring some outstanding talents.
There are three traditional large investment banks on Wall Street, Goldman Sachs, Morgan Stanley and Merrill Lynch.I personally think that the level of Merrill Lynch is at least an order of magnitude different from the previous two.If you compare them with Internet companies, they are roughly equivalent to Google, Yahoo and AOL.And Goldman Sachs can be said to be unmatched among the investment banks in the world.
Goldman Sachs was founded in 1869. The founder, Marcus Goldman, was a German-born Jew. Its earliest business was to sell the short-term bonds issued by the company for those industrialists (Commercialpaper, note that the meaning of paper here is bond. instead of paper).You can imagine Goldman wearing a suit and leather shoes, carrying a lockbox full of bonds similar to treasury rolls, and selling bonds door to door in Manhattan, New York.Knowing many businessmen by selling bonds, Goldman entered the New York Stock Exchange in 1896 to trade stocks for others. At this time, his son-in-law Samuel Sachs (Samuel Sachs) joined his business, so the company changed its name For Goldman Sachs, it is a combination of their respective surnames.By the way, Sachs' daughter, Goldman's granddaughter, has been working in China since the founding of the People's Republic of China. Like Rittenberg, Ma Haide, and Epstein, she is an old friend of the Chinese people.
Goldman Sachs' main business is doing transactions for others and underwriting companies' listings (underwriter).Some of its big deals in the early years included taking on the listing of the famous Sears department store (Sears).After the Great Depression in the 1930s, Goldman Sachs gradually changed from doing transactions (low-end financial services) to managing wealth and investment for large companies and wealthy people, and thus developed from a general securities dealer to a major Wall Street investment company.After that, Goldman Sachs presided over the IPO of Ford Motor Company (1956), the bankruptcy of the American railroad system.Since the 1970s, Goldman Sachs has moved from the United States to the world, and has led the privatization of Western Europe in the 1980s and the privatization of the former Soviet Union and Eastern Europe in the 1990s.
Goldman Sachs has three main businesses, event-driven business (Event Driven Business), including the listing of companies, mergers and splits, wealth management (Wealth Management), and various funds, including hedge funds and private equity funds.
Goldman Sachs is the world's largest listing contractor, contracting half of the largest listings in the world's history, see the table below
In 1999, during the climax of listing in the United States, Goldman Sachs, which had been a private company for a century, also went public (history has proved that when some long-term private companies that do not need funds at all also make a fortune through listing, the stock market It’s been a few years to the top) Goldman Sachs’ nature has changed a lot after it went public. Before that, its primary concern was to make money for its clients. After it went public, it had to meet and surpass Wall Street’s Expectations, so it puts its own money in the first place.In recent years, like other investment companies and banks on Wall Street, it has produced a variety of financial derivatives, which have brought great losses to itself and its customers.However, Goldman Sachs, relying on its high-level research department, smelled the problem earlier than other investment banks, and at the same time had strict risk control. At the end of last year, it sold almost all bad bonds with a loss of about 10%. Bonds could lose about 90% today, and Goldman Sachs has escaped a catastrophe.When Lehman, Merrill Lynch, and AIG went wrong recently, Goldman Sachs can proudly announce to clients that it doesn't own any of these companies' bad debts.
In view of Goldman Sachs' long-term good investment record, many investors all over the world follow the lead of Goldman Sachs, which makes it a leader in the financial field.Although the market value of Goldman Sachs was only 40 billion US dollars in October 2008, which is equivalent to a fraction of Microsoft or IBM, but it has 500 billion discretionary cash, plus its large number of followers, even in the field of technology , and its role is far from comparable to Microsoft, IBM and Google.Let's look at two examples to see how it works.
At the beginning of this year, when the price of crude oil was only US$100 per barrel, Goldman Sachs declared that the price of crude oil would reach US$200 per barrel, artificially creating a crisis.Although there was an oversupply of crude oil in the world market at that time, the price of crude oil rose to US$150 in just over a month.Some countries began to panic and purchased a large amount of combat readiness reserves at around 140 US dollars.At this time, Goldman Sachs suppressed the price of oil again, and the price of crude oil plummeted. Many hedge funds speculating on oil went bankrupt.As one of the world's largest oil exporters, Russia is a beneficiary of rising oil prices. When oil prices fell, in order to safeguard its own economic interests, Russia created tension in Georgia, threatening the transportation of oil pipelines. At the same time, the Organization of the Petroleum Exporting Countries (OPEC) ) tried to stabilize oil prices by cutting production, but to no avail.Even though Hurricane IKE destroyed a large number of oil refining equipment in Texas, the oil price still cannot grow. There is only one reason. Investment companies led by Goldman Sachs want to suppress oil prices.It took only three months for the price of crude oil to go from US$100 per barrel to a high of US$150, and then back to US$100, and the current oil price has fallen by more than half from the highest point.Goldman Sachs reached an agreement with a Chinese company to bet on oil prices when oil prices rose to their highest point.According to the agreement, by the end of 2010, if the oil price closes above US$63.5 per barrel per month, Goldman Sachs will pay the Chinese company US$1.5 per barrel x 200,000 barrels; This company (closing price - 62) x 200,000 barrels of money, if it closes below $62, this company will have to pay Goldman Sachs (62 - closing price) x 400,000 barrels of money.Assuming that the price of crude oil remains above $62, Goldman Sachs is losing money, otherwise it is making money.If the price of crude oil falls to $50, Goldman Sachs will receive $4.8 million from this company every month, and by the end of 2010 it will be more than $100 million.From here you can see who is now hoping for lower oil prices.Another unfair point in this contract is that even if the price of oil rises to sky-high prices, Goldman Sachs will only lose $300,000 a month.
After frying the oil, Goldman Sachs then published a research report, singing against Lehman.Although everyone knew about Lehman's problems, Lehman's stock plummeted as soon as Goldman Sachs' report came out, forcing the latter to seek a buyer.In fact, most Wall Street companies are well aware that Goldman Sachs wants Lehman to die, but Lehman cannot survive. Therefore, so many banks in the United States, including the government, will not save Lehman.Merrill Lynch, who was in a bad situation, understood quickly and sold herself to the Bank of America in a hurry, which can be regarded as climbing a high branch and temporarily escaping disaster.After Lehman and Merrill Lynch were resolved on Sunday, September 14, the $700 billion bailout plan for the banking industry was submitted to Congress by Secretary of the Treasury Paulson, the former CEO of Goldman Sachs, on Thursday, September 18.According to Paulson himself, this plan has been in his pocket for a long time, and he did not take it out because he was "afraid" that it would fail.As the U.S. presidential election is heating up today, lawmakers from both parties have to support the plan in the end, and Goldman Sachs and Morgan Stanley, the two remaining fruits of Wall Street, are undoubtedly the biggest beneficiaries of the plan.Some people think that Lehman and Merrill Lynch can escape the catastrophe as long as they persist for another five days. In fact, as long as the two companies do not die for a day, this plan will not be taken out of Paulson's pocket.
Among technology companies, there is no one more afraid of Microsoft than Microsoft.So far, Microsoft has only crushed Netscape, a company with thousands of employees, and suppressed Sun and Apple.In the past six months, Goldman Sachs first crushed a group of oil giants in oil, and then even suppressed Russia, a permanent member of the United Nations, and then crushed its 100-year history in this month's financial crisis. The two competitors are Lehman and Merrill Lynch. (So, when I asked the managers of Goldman Sachs about the Rothschild family, they felt that this little flower that manages billions of dollars and only has a measly $100 million in profits cannot compete with them, who manipulate the world financial order. compared to investment banks.)
The only company in the world that can compare with Goldman Sachs is Morgan Stanley.As early as more than a decade ago, Morgan Stanley's scale and influence were far above Goldman Sachs, but it was surpassed by Goldman Sachs in the past few years.
Morgan Stanley and J.P. Morgan, a major bank in the United States, were originally founded by J.P. Morgan, a great American financier in the 20th century. After the 1929-1933 economic crisis, the U.S. government prohibited banks from buying and selling stocks for investment, so the investment department of J.P. Morgan Bank had to be separated. In 1935, J.P. Morgan's son Henry Morgan and executive Harold Stanley (Harold Stanley), who led part of the J.P. Morgan Bank, established Morgan Stanley & Co.
Morgan Stanley was born out of J.P. Morgan, the largest bank in the United States, so it has a higher starting point than Goldman Sachs. It has been very successful since its establishment.Even in the 1930s, when the American economy was depressed, it has been developing healthily and rapidly.In the year it was established, it won 24% of the public coffer market.After World War II, it played a pivotal role in large-scale listings, acquisitions and bankruptcy transactions.It undertook the listing of IBM stock, the issuance of AT&T and General Motors corporate bonds, and even the issuance of United Nations bonds.
The entire half century from the end of World War II to the end of the 20th century was the golden age of Morgan Stanley.In the past 50 years, financial companies on Wall Street have been second to none.In the sixties, it expanded its business to Europe.In the 1970s, it strengthened the department it handles corporate acquisitions and mergers.At this time, Morgan Stanley's business areas can be summarized into three aspects: mergers and acquisitions, spin-offs and listings of companies, management of institutional and personal property, and asset management such as stocks, bonds and private equity funds.
The company's listing, acquisition and spin-off business is Morgan Stanley's specialty.Morgan Stanley is one of the largest publicly traded contractors in the world.As can be seen from the above table, it has contracted many large-scale listing actions, including the very sensational Google listing and last year's largest listing of Blackstone.In addition, it is a listed contractor for Apple.This division is Morgan Stanley's most profitable division and also its most valuable.In order to make money, Morgan Stanley naturally hopes that as many technology companies go public, the better, the more frequent mergers and divisions the better.
Financial management for institutions and individuals is a relatively new business for Morgan Stanley.Before the 1970s, stock transaction fees were very high, and securities companies mainly made money by charging transaction fees.However, with the development of computer networks, transaction costs have dropped significantly, and many low-price brokers (Brokers), such as Scottrade, E-trade, etc., have been born.Firms like Morgan Stanley certainly don't compete with these cheap dealers, so they manage their finances for institutions and individuals.
The third department has a very wide range of businesses. It provides services such as stocks, bonds, and private equity funds to many institutions and even government departments around the world. Morgan Stanley just acts as a bridge.Some institutions and even government departments also hand over pensions and endowments to Morgan Stanley to manage.Because Morgan Stanley was too bold in fund management before the financial crisis, this department suffered heavy losses and became a burden for Morgan Stanley.
It is worth mentioning that Morgan Stanley is a pioneer of computerization in the banking industry.As early as 1962, it used computers to analyze the stock market and established many financial mathematical models (Quantitative Financial Analysis Model), and achieved great success.Due to Morgan Stanley's influence in the financial world, other financial companies have followed suit, creating a new field of analyzing the market with mathematical models.This played a leading role in the rise of hedge funds after the 1980s.
Until the 1990s, Morgan Stanley played the role of the investment bank boss.However, in the late 1990s, with the rapid development of the American economy, many large companies expanded rapidly, and Morgan Stanley was no exception. It successively bought two investment banks and the credit card company Discover.Due to over-expansion, the newly acquired companies have begun to depreciate the value of Morgan Stanley's golden name, and its overall service quality has also been greatly reduced. In 2007, it had to spin off the Discover credit card business to refocus on its traditional investing business.
Although Morgan Stanley was hit hard in this financial crisis, it is still the investment bank with the most experience and level of asset management in the world. Therefore, the U.S. Treasury Department specially hired Morgan Stanley as a consultant to solve the problems of Freddie Mac and Fannie Mae. housing loan issues.
In 1999, during the climax of listing in the United States, Goldman Sachs, which had been a private company for a century, also went public (history has proved that when some long-term private companies that do not need funds at all also make a fortune through listing, the stock market It’s been a few years to the top) Goldman Sachs’ nature has changed a lot after it went public. Before that, its primary concern was to make money for its clients. After it went public, it had to meet and surpass Wall Street’s Expectations, so it puts its own money in the first place.In recent years, like other investment companies and banks on Wall Street, it has produced a variety of financial derivatives, which have brought great losses to itself and its customers.However, Goldman Sachs, relying on its high-level research department, smelled the problem earlier than other investment banks, and at the same time had strict risk control. At the end of last year, it sold almost all bad bonds with a loss of about 10%. Bonds could lose about 90% today, and Goldman Sachs has escaped a catastrophe.When Lehman, Merrill Lynch, and AIG went wrong recently, Goldman Sachs can proudly announce to clients that it doesn't own any of these companies' bad debts.
In view of Goldman Sachs' long-term good investment record, many investors all over the world follow the lead of Goldman Sachs, which makes it a leader in the financial field.Although the market value of Goldman Sachs was only 40 billion US dollars in October 2008, which is equivalent to a fraction of Microsoft or IBM, but it has 500 billion discretionary cash, plus its large number of followers, even in the field of technology , and its role is far from comparable to Microsoft, IBM and Google.Let's look at two examples to see how it works.
At the beginning of this year, when the price of crude oil was only US$100 per barrel, Goldman Sachs declared that the price of crude oil would reach US$200 per barrel, artificially creating a crisis.Although there was an oversupply of crude oil in the world market at that time, the price of crude oil rose to US$150 in just over a month.Some countries began to panic and purchased a large amount of combat readiness reserves at around 140 US dollars.At this time, Goldman Sachs suppressed the price of oil again, and the price of crude oil plummeted. Many hedge funds speculating on oil went bankrupt.As one of the world's largest oil exporters, Russia is a beneficiary of rising oil prices. When oil prices fell, in order to safeguard its own economic interests, Russia created tension in Georgia, threatening the transportation of oil pipelines. At the same time, the Organization of the Petroleum Exporting Countries (OPEC) ) tried to stabilize oil prices by cutting production, but to no avail.Even though Hurricane IKE destroyed a large number of oil refining equipment in Texas, the oil price still cannot grow. There is only one reason. Investment companies led by Goldman Sachs want to suppress oil prices.It took only three months for the price of crude oil to go from US$100 per barrel to a high of US$150, and then back to US$100, and the current oil price has fallen by more than half from the highest point.Goldman Sachs reached an agreement with a Chinese company to bet on oil prices when oil prices rose to their highest point.According to the agreement, by the end of 2010, if the oil price closes above US$63.5 per barrel per month, Goldman Sachs will pay the Chinese company US$1.5 per barrel x 200,000 barrels; This company (closing price - 62) x 200,000 barrels of money, if it closes below $62, this company will have to pay Goldman Sachs (62 - closing price) x 400,000 barrels of money.Assuming that the price of crude oil remains above $62, Goldman Sachs is losing money, otherwise it is making money.If the price of crude oil falls to $50, Goldman Sachs will receive $4.8 million from this company every month, and by the end of 2010 it will be more than $100 million.From here you can see who is now hoping for lower oil prices.Another unfair point in this contract is that even if the price of oil rises to sky-high prices, Goldman Sachs will only lose $300,000 a month.
After frying the oil, Goldman Sachs then published a research report, singing against Lehman.Although everyone knew about Lehman's problems, Lehman's stock plummeted as soon as Goldman Sachs' report came out, forcing the latter to seek a buyer.In fact, most Wall Street companies are well aware that Goldman Sachs wants Lehman to die, but Lehman cannot survive. Therefore, so many banks in the United States, including the government, will not save Lehman.Merrill Lynch, who was in a bad situation, understood quickly and sold herself to the Bank of America in a hurry, which can be regarded as climbing a high branch and temporarily escaping disaster.After Lehman and Merrill Lynch were resolved on Sunday, September 14, the $700 billion bailout plan for the banking industry was submitted to Congress by Secretary of the Treasury Paulson, the former CEO of Goldman Sachs, on Thursday, September 18.According to Paulson himself, this plan has been in his pocket for a long time, and he did not take it out because he was "afraid" that it would fail.As the U.S. presidential election is heating up today, lawmakers from both parties have to support the plan in the end, and Goldman Sachs and Morgan Stanley, the two remaining fruits of Wall Street, are undoubtedly the biggest beneficiaries of the plan.Some people think that Lehman and Merrill Lynch can escape the catastrophe as long as they persist for another five days. In fact, as long as the two companies do not die for a day, this plan will not be taken out of Paulson's pocket.
Among technology companies, there is no one more afraid of Microsoft than Microsoft.So far, Microsoft has only crushed Netscape, a company with thousands of employees, and suppressed Sun and Apple.In the past six months, Goldman Sachs first crushed a group of oil giants in oil, and then even suppressed Russia, a permanent member of the United Nations, and then crushed its 100-year history in this month's financial crisis. The two competitors are Lehman and Merrill Lynch. (So, when I asked the managers of Goldman Sachs about the Rothschild family, they felt that this little flower that manages billions of dollars and only has a measly $100 million in profits cannot compete with them, who manipulate the world financial order. compared to investment banks.)
The only company in the world that can compare with Goldman Sachs is Morgan Stanley.As early as more than a decade ago, Morgan Stanley's scale and influence were far above Goldman Sachs, but it was surpassed by Goldman Sachs in the past few years.
Morgan Stanley and J.P. Morgan, a major bank in the United States, were originally founded by J.P. Morgan, a great American financier in the 20th century. After the 1929-1933 economic crisis, the U.S. government prohibited banks from buying and selling stocks for investment, so the investment department of J.P. Morgan Bank had to be separated. In 1935, J.P. Morgan's son Henry Morgan and executive Harold Stanley (Harold Stanley), who led part of the J.P. Morgan Bank, established Morgan Stanley & Co.
Morgan Stanley was born out of J.P. Morgan, the largest bank in the United States, so it has a higher starting point than Goldman Sachs. It has been very successful since its establishment.Even in the 1930s, when the American economy was depressed, it has been developing healthily and rapidly.In the year it was established, it won 24% of the public coffer market.After World War II, it played a pivotal role in large-scale listings, acquisitions and bankruptcy transactions.It undertook the listing of IBM stock, the issuance of AT&T and General Motors corporate bonds, and even the issuance of United Nations bonds.
The entire half century from the end of World War II to the end of the 20th century was the golden age of Morgan Stanley.In the past 50 years, financial companies on Wall Street have been second to none.In the sixties, it expanded its business to Europe.In the 1970s, it strengthened the department it handles corporate acquisitions and mergers.At this time, Morgan Stanley's business areas can be summarized into three aspects: mergers and acquisitions, spin-offs and listings of companies, management of institutional and personal property, and asset management such as stocks, bonds and private equity funds.
The company's listing, acquisition and spin-off business is Morgan Stanley's specialty.Morgan Stanley is one of the largest publicly traded contractors in the world.As can be seen from the above table, it has contracted many large-scale listing actions, including the very sensational Google listing and last year's largest listing of Blackstone.In addition, it is a listed contractor for Apple.This division is Morgan Stanley's most profitable division and also its most valuable.In order to make money, Morgan Stanley naturally hopes that as many technology companies go public, the better, the more frequent mergers and divisions the better.
Financial management for institutions and individuals is a relatively new business for Morgan Stanley.Before the 1970s, stock transaction fees were very high, and securities companies mainly made money by charging transaction fees.However, with the development of computer networks, transaction costs have dropped significantly, and many low-price brokers (Brokers), such as Scottrade, E-trade, etc., have been born.Firms like Morgan Stanley certainly don't compete with these cheap dealers, so they manage their finances for institutions and individuals.
The third department has a very wide range of businesses. It provides services such as stocks, bonds, and private equity funds to many institutions and even government departments around the world. Morgan Stanley just acts as a bridge.Some institutions and even government departments also hand over pensions and endowments to Morgan Stanley to manage.Because Morgan Stanley was too bold in fund management before the financial crisis, this department suffered heavy losses and became a burden for Morgan Stanley.
It is worth mentioning that Morgan Stanley is a pioneer of computerization in the banking industry.As early as 1962, it used computers to analyze the stock market and established many financial mathematical models (Quantitative Financial Analysis Model), and achieved great success.Due to Morgan Stanley's influence in the financial world, other financial companies have followed suit, creating a new field of analyzing the market with mathematical models.This played a leading role in the rise of hedge funds after the 1980s.
Until the 1990s, Morgan Stanley played the role of the investment bank boss.However, in the late 1990s, with the rapid development of the American economy, many large companies expanded rapidly, and Morgan Stanley was no exception. It successively bought two investment banks and the credit card company Discover.Due to over-expansion, the newly acquired companies have begun to depreciate the value of Morgan Stanley's golden name, and its overall service quality has also been greatly reduced. In 2007, it had to spin off the Discover credit card business to refocus on its traditional investing business.
Although Morgan Stanley was hit hard in this financial crisis, it is still the investment bank with the most experience and level of asset management in the world. Therefore, the U.S. Treasury Department specially hired Morgan Stanley as a consultant to solve the problems of Freddie Mac and Fannie Mae. housing loan issues.