The financial sector has been one of the worst-performing parts of the market in 2020, down by more than 18% this year, compared with a 9% gain in the S&P 500. However, investment banking giant Goldman Sachs (NYSE:GS) is outperforming its peers, and profits are nearly as high as they've ever been. In this Fool Live clip, banking experts Jason Moser and Matt Frankel, CFP, explain why.

Jason Moser: Let's talk a little bit about Goldman Sachs, because this is the opposite of Wells Fargo (NYSE:WFC). This is going to be more a story really about the benefits of the investment banking operations even while credit growth for Goldman remains a challenge.

Matt Frankel: Goldman, we've talked about before, is pushing more into the consumer space. But like you said, they're still mostly an investment bank. On the consumer side, their consumer banking revenue grew 50% year over year.

Jason Moser: There is a lot of good news about Marcus on that call, I saw.

Matt Frankel: There was, and the biggest driver of that 50% was the Apple (NASDAQ:AAPL) Card, higher credit card lending balances. But just their revenue was off the charts, up 30% year over year. Their earnings were almost $10 a share. That is the biggest quarter Goldman's ever had. During the middle of the pandemic, to have your record earnings, that's pretty impressive. I mean, that shattered expectations.

The reason, like I said, it's because a lot of investment banking operations do better during tough times. Goldman's trading revenue was up 29% year over year. Asset management revenue was up 71%. They're firing on all cylinders. IPO underwriting was doing phenomenally well. Anyone who's followed the market knows that the IPO market has just exploded this year, and equity underwriting is a big part of Goldman's business. The investment banking business is doing the complete opposite of what Wells Fargo is doing.

I'm actually shocked that Goldman is not up for the year after reading numbers like this. Not just this, the quarter before. If you remember, the second quarter was their second-best quarter ever. When you see these kind of numbers, I mean, Goldman trades for about -- let me do the math real quick -- Goldman trades for about 20 times this quarter's earnings.

Jason Moser: Wow.

Matt Frankel: That's a crazy low valuation. Like you said, I'm shocked that Goldman's not a little more expensive than it is.

Jason Moser: Yeah. It struck me as, well, like looking at the chart of the returns, the Goldman down around 10% for the year, and given the results that they brought in, certainly feels like they could be better. But I guess that speaks a little bit to just the general feeling in the market today regarding banks writ large. I mean, they're all dealing with their fair sets of challenges. Thankfully for Goldman Sachs, they have that investment banking operation to fall back on.

Matt Frankel: Investment banking revenue is also less consistent, is worth mentioning too.

Jason Moser: Yeah, that's a good point there. It's like Disney's (NYSE:DIS) theater division. It's lumpy. Sometimes it's good, sometimes; it's not so good.

Matt Frankel: Trading revenue goes like this. It gets a roller coaster ride from quarter to quarter. Just because trading revenue was strong this year has no bearing on what it's going to do next year. As opposed to commercial banking, you build your loan portfolio by $100 billion. That produces residual income that comes in quarter-after-quarter, whereas investment banking is a lot less predictable. So the market does discount that a little bit.