How do you pick a winner? Bet on both sides.
CEOs and companies donate generously to both political parties; more than 70 percent of the S&P 500 practice this approach. Traders of options craft strategies like "straddles" to cover both sides. And savvy investors like Goldman Sachs play both sides too: John Paulson's mortgage-market bets minted him a billionaire in the 2008 meltdown. But Goldman profited by both co-investing in this strategy while also selling the exact opposite trade to its clients. Playing both sides, for which Goldman is rightly assailed, results in conflicts of interest, and erosion of client trust.
This week's New York Times guest editorial by Greg Smith, formerly of Goldman Sachs' equity derivatives unit, continues to chip away at Goldman's formerly stellar brand and reputation, cracking the foundation built more than Marcus Goldman and Samuel Sachs back more than 140 years ago. This is not a surprise to most of us, but continues to reinforce how the culture of "money at any cost" is deeply embedded on Wall Street. Greg Smith's piercing quote sums it up: "People who care only about making money will not sustain this firm -- or the trust of its clients -- for very much longer."