We've discussed the apparent divergence between the business models at Morgan Stanley and Goldman Sachs. The New York Times weighs in with a piece that looks at Morgan Stanley's decision to scale back its trading risk, instead opting to expand in wealth management. Some may argue that the decision is backfiring on the company. They would say, hey, just look at Goldman Sachs's expected near-record profits for the second quarter.

Morgan of course will likely produce a loss. Would that suggest a return to the days of big proprietary bets has already returned? I'd argue it would be premature to make such conclusions now. Morgan Stanley long-term may still be better off morphing into a fundamentally different animal, one that is more conservative and ultimately deserving of a higher multiple. You would be unwise to try to match Goldman's prowess as a proprietary trader and principal investor--that has been proven. 

For more:
- here's the article

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