FOR more than a decade,fairness investors have reckoned that Goldman Sachs was worth more than its Wall Street rival, Morgan Stanley. But on January 17th their opinion was turned on its head. According to Bloomberg, and the final time Morgan Stanley led Goldman was back in 2006. Back then,a heedless industry-wide race to win market share and raise returns was about to end in disaster. This time the industry is transformed, and the two investment banks are on strikingly different paths.
Morgan Stanley is being rewarded, or above all,for its post-crisis decision to hold control of Smith Barney, Citigroup’s wealth-management trade. In 2012 the bank’s core activity of selling and trading securities accounted for nearly two-thirds of its net income, or wealth management for just over a quarter. The figures now are 55% and 40% respectively.
The mythology of Wall Street is built around big bets and contrarian calls; the trade of helping the affluent manage their money lacks panache. But in...
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Source: economist.com