For the past few years, Goldman Sachs has dangled the promise of something new – a diversification in its business mix that would give shareholders a reason to finally re-rate the stock. But while the firm still has the glint of Goldman on the surface, disappointing earnings are revealing something less valuable underneath. Can its second investor day now fix the legacy of the first?
On February 28, Goldman Sachs chief executive David Solomon will walk on stage at what will be only the second investor day the bank has ever held. When he does, his audience may want him to show two things: first, that he is as good at serving up humble pie as he is at cooking the Thanksgiving turkey he likes to show off in LinkedIn posts. The second is that he and the rest of the firm have now worked out how to diversify away from Goldman’s longstanding core businesses while actually making money doing so. The second of those is much the more important.
The firm’s first investor day, held in January 2020 and referenced endlessly ever since, was a heritage-fest that luxuriated in the 150-year history of the firm and was all about telling the world not only how great Goldman was at doing the stuff it has always done but also how great it was going to be at doing some of the stuff that it had not really done before, such as the humdrum business of retail banking.
Well, a lot has happened since then. It turns out that in finance, past performance is not necessarily indicative of future results.