Business columns: News flash: Goldman isn’t a charity
Apparently we need to be reminded that Goldman Sachs is in business to make money, said Barry Goldman in <em>Los Angeles Times.</em>
Barry GoldmanLos Angeles Times
Apparently we need to be reminded that Goldman Sachs is in business to make money, said Barry Goldman. A storm of public outrage erupted when it was revealed that before the financial crisis, Goldman Sachs sold risky mortgage bonds to its customers and then, for its own benefit, made financial bets that the price of the bonds would fall. Goldman made fistfuls of money when those bets proved correct. If you’re shocked, then you don’t understand capitalism.
Back in the 18th century, Adam Smith observed that “the butcher, the brewer, or the baker” is motivated by self-interest, not unselfish benevolence. Or to put it in contemporary terms, the average stockbroker isn’t motivated by a desire to see that his clients’ kids have money for college, but rather by “a desire to see that his kids have money for college.”
So stay skeptical. “When the voice on the phone tells you he’s got an investment that will double your money in 30 days, ask yourself: “‘Why is he calling me? If I knew about an investment that would double my money in 30 days, would I call him?’”