The Duality of Our Financial System

Wall Street may be flawed, but there's been progress

In November of 2009 Lloyd Blankfein, then the chief executive of Goldman Sachs, stated in an interview that as a banker, he’s “doing God’s work.”

That was one opinion on investment bankers. Several months later, a journalist provided another viewpoint: Goldman Sachs, he wrote, is “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

So which is it? My view is that, in a lot of ways, both are true. Our financial system is today no better than it was when Fred Schwed satirized it decades ago, except that the greed and the excesses are probably worse today than they were then. But despite that, elements of our financial system have delivered enormous benefits for individual investors. Most notably, the cost of retail mutual funds continues to drop.

As long as you stick to simple and straightforward investments, that makes today’s investment environment, in many respects, the best it’s ever been for investors.