What's going on?

It wasn�t a surprise to investors but it was still a big decline: the famous US investment bank Goldman Sachs said its first quarter profit was down 60% versus one year ago. It�s indicative of the tough time that Wall Street banks have faced recently.

What does this mean?

Goldman is more exposed to Wall Street-type activities (like trading stocks and advising companies on mergers) than many other banks because it doesn�t have much of a plain vanilla banking business, e.g. providing mortgages to people. And so when the markets have a temper-tantrum, like they did in January and February, Goldman can struggle more than others. And that�s pretty much what happened. However, its stock actually finished up on Tuesday, which was perhaps due to a belief that the market rebound will continue into the second quarter and Goldman will be well-positioned to benefit.

Why should I care?

For you personally: The �Gordon Gekko� days of Wall Street are over. Goldman has aggressively cut costs: its total expenses fell by almost one-third mainly due to a 40% cut in �compensation and benefit costs.� Gone are the days of routinely travelling in business class to entertain clients at fancy restaurants. While you can still make a great living working on Wall Street, it�s a lot less likely that�ll you�ll be able to quickly afford that Greenwich apartment you�ve been whimsically eyeing…

The bigger picture: Three-legged horses have cleared higher hurdles. Virtually all the big banks released earnings in the past week and they all �beat� expectations � but that�s because expectations were downgraded so much over the quarter. While Goldman under-performed other banks because of its big exposure to Wall Street, virtually all banks saw significant revenue declines. Their stocks, however, have moved higher in the past week on hopes that spring � and better markets � will lead to sunnier days ahead.