What's going on?

Investment bank Goldman Sachs reported some seriously disappointing fourth-quarter results on Tuesday.

What does this mean?

Goldman Sachs isn�t alone in laying off workers, but it has been wielding the job-cutting ax with particular gusto compared to other Wall Street residents. And now we know exactly why: the firm missed profit expectations by a country mile, which had a lot to do with slumping investment banking and asset management fees. That�s probably why the firm�s trying its best to Ctrl Z the hiring spree it went on when dealmaking was at its height � slashing jobs and other costs left, right, and center. But that frenzy�s come a bit late in the day, and some investors might not be impressed by Goldman�s Johnny-come-lately cost-cutting antics.

Why should I care?

For markets: No rush for gold.
The world of investment banking is cyclical, and trading revenues and advisory fees ebb and flow � so by the time the results roll in, last quarter�s earnings are already ancient history. That means it�s not the quarterly sprint that counts: it�s all about the multi-year marathon. So sure, last quarter�s numbers were a disappointment � but Goldman�s a finely-tuned long-distance runner, and there isn�t any finish line in sight. Long-term shareholders know that too, which could be why the firm�s share price is still trading near all-time highs.

The bigger picture: Banks bounce back.
After the financial crisis hit, experts worried that investment banks� best days were behind them, and predicted they�d never see pre-recession profit levels again. But the Wall Street titans clawed their way back, and of the five most famous banking firms, only Citigroup�s share price has been outstripped by the S&P 500 over the last ten years. That�s quite a feat for the industry, especially given that it seems to have ditched the profitable but questionable moves that landed it in hot water before.