Goldman Sachs posts its worst earnings miss in a decade as revenue falls while expenses rise:
Goldman said quarterly profit plunged 66% from a year earlier to $1.33 billion, or $3.32 per share, about 39% below the consensus estimate.
That made for the largest EPS miss since Oct. 2011.
Revenue held up better, at $10.59 billion, down 16% from a year earlier and just below the estimate.
The question we need to ask is WHY?
Goldman said operating expenses jumped 11% from a year earlier, to $8.09 billion, due to higher compensation, benefits and transaction-based fees, among other reasons.
That is about $800 million more than analysts had expected for quarterly costs.
This will lead to inevitable more cost-cutting and layoffs at Goldman.
You might be thinking to yourself, why are you sharing this with me?
When the economy cycles, that cycle includes a few key components: the stock market, the jobs market and finally the real estate market.
The stock market is typically the leading market, our 401K’s, brokerage accounts and retirement accounts are the first and fastest to take the hit.
Then, the jobs market comes into focus as the next market to get destroyed. Companies simply can’t sustain their employees along with rising expenses all while trying to deliver performance for their investors.
Finally, the real estate market gets its share of the pain. The performance of this market is contingent on the financial stability of the jobs market and the financial security / nest egg’s of prospective buyers in the market.
What’s the bottom line:
Our “economic cycle” includes 3 major markets, while they all cycle at different speeds, they all make up the most significant components of our economy.
When all 3 align in the same direction, the economy offers a definable direction. When they don’t align, there’s broad pain to be had.
When I say broad pain, I simply mean that at least 1 of the 3 components of the economy isn’t performing well.
You’ve seen your retirement accounts take a 30% cut, you’re seeing corporate jobs being cut everywhere you look … what’s left ? ? ?
An overinflated real estate market which when it’s turn to cycle lower, it’ll be like pricking a balloon with a pin.
Some would say “inventory is low” but when the qualified buyers dry up after losing their jobs – any amount of inventory will be surplus . . .
Why do I share this doom and gloom with you:
Because it’s NOT doom and gloom. It’s a wake up call. It’s time for you to do what you need to for yourself!
Find a smaller company to go work for, somewhere that you’ll be valued as a person rather than just a payroll entry.
Build something for yourself: a small business, a side hustle, start trading, buy a piece of investment real estate… do something for you!
Look, I can’t do it for you. But if coaching is what you need to give you the confidence you need to take the next step – that I can offer you.