[ by Howard Haykin and Melanie Gretchen  ]

Greg Smith's Topic for Today: Types of Goldman Sachs Clients.

I'm going out on a limb, here, but I'm guessing that Greg Smith is a better derivatives sales trader than he is an intuitive thinker. 

Context. It's April 2009, Passover, the Jewish holiday, has just ended.  One year earlier, Bear Stearns was sold to JPMorgan, 6 months earlier Lehman Brothers went bust.  The financial crisis weigh heavily on the Street, and everyone's "bananas." Goldman personnel have adopted a dark, aggressive attitude, which erodes fiduciary responsibility, and worsens relationships. 

Classifying Goldman Clients in 4 Categories. Smith observes that Goldman clients are characterized as one of 4 types of clients - aside from the Muppets.  With Passover still fresh in everyone's minds, Smith makes the association of the 4 client types to the annual  Passover ritual - the seder, or retelling of the escape from Egypt.  [therein lies my reference to not being a good "intuitive thinker."

The Meaning of the Four Client Categories. Of The Passover, shortly afterapparently is a better 's topic for today if types of Goldman Sachs clients, explains that, aside from Muppets, Goldman Sachs had 4 Types of Clients.  Apparently, Greg Smith In his tell-all book, "Why I Left Goldman Sachs," the former VP in, organized the firm's clients into 4 types (besides Muppets).  Consider his 2009 in the context of current events: (i) after Passover, (ii) after Bear Stearns had been sold to JPMorgan, (iii) after Lehman went bust, and (iv) in the thick of the financial crisis.  Pray your not one of these:

1. The Wise Client: Large hedge funds and institutional investors with tons of resources — specifically smart employees who often used to work for Wall Street banks.
2. The Wicked Client: A smart client who pushes the envelope and tries to game Goldman (this is where Raj Rajaratnam gets a shout-out).
3. The Simple Client: Often large asset managers and pension funds who are big and have outdated systems. Smith points out that Goldman used to take these clients by the hand and guide them, but after the financial crisis things changed.
4. The Client Who Doesn't Know How To Ask Questions: Simple, trusting clients with lots of money and confidence that Goldman traders would take good care of them. Think of someone running a charity or an endowment. These clients might buy complicated "exotic" products and get in way over their heads.

The last one would make the investment bank's list of top 25 clients according to fees generated, according to Mr. Smith.

"There is something highly disconcerting about seeing a global charity of philanthropic organization or teacher's pension fund in the top 25 of a firm's clients."

For further details, go to [Business Insider, 10/23/12].