Dear Mr. Berko:  My broker wants me to invest $70,000 in a Goldman Sachs  mutual fund called a Structured U.S. Equity Flex fund. He says  this fund will beat the Standard & Poor’s averages because it uses  a new type of investment formula called 120/20 that can  increase leverage without increasing risk.  I’m enthusiastic about this fund and I’m also excited about  Goldman Sachs’ expert management. But I’d like to know what  you think about this opportunity.  C.T., Santa Monica, Calif.

Dear C.T.:

I wouldn’t trust the word of Goldman  Sachs any more than I’d  trust the promises of Santa  Claus, the Easter Bunny or the  Great Pumpkin. Goldman  Sachs may be a great name if  you are an institutional client  with billions of dollars. Goldman  Sachs may be a super  name if you’re a huge manufacturing  company that wants to  go public. Goldman Sachs may  be a grand name if you want to  raise $15 billion and take over  a large bank. Goldman Sachs  may be a swell name if you’re a  sovereign nation and want to raise a  few hundred billion dollars to invade  Latin America. And Goldman Sachs may  be a superb name if you need billions to  corner the futures market in coffee,  corn or cocoa.

But if you’re a hard-working Joe who  has diligently prepared for retirement,  your physical presence would humiliate  a Goldman Sachs man.You’re among  the great unwashed! Goldman doesn’t  look down its nose at people like you; it  looks down its chin at people like you.  Goldman’s mutual funds could be dangerous  to your wealth.

Goldman Sachs Structured U.S. Equity  Flex Fund (GFEAX-$10.39) is one of  more than 200 mutual funds designed,  marketed, issued, owned, operated, controlled  and managed by Goldman  Sachs. Every year Forbes, Business Week  and other financial periodicals publish  a list of the best 10, 25, 50 or 100 mutual  funds.You know what? I can’t recall a  single one of Goldman Sachs’ 200-plus  mutual funds that has been on those  lists. So you might say that Goldman  Sachs’ expert management plus $3 will  get you a cup of coffee at Starbucks.

Now I don’t care what the golden  boys at Goldman claim; there isn’t a  “new way to beat the market.” There  isn’t even an old way to beat the market.  Frankly, those fancy pants at Goldman  just discovered a new way to bong  you out of $70,000, euchre a 5.5 percent  commission and rake in a  nice quarterly management  fee with their so-called 120/20  trading program.

Several months ago, I listened  to a Goldman man  explain this 120/20 program  and was surprised, when he  finished his discourse, that he  didn’t blow lightly on his nails.

Here’s how this 120/20  “shtick” works: For each  $1,000 invested in bullish  equities, the Goldman man  sells short $200 in issues in  which he is bearish, in effect taking a  bet that the $200 in bearish stocks will  fall in value. The Goldman man then  invests the additional proceeds from  the short sale (when a stock is sold  short the proceeds are credited to the  account) in stocks he believes will  increase in value. The result of a $1,000  investment is that the Goldman man  now has $1,200 invested in bullish  equities as well as $200 in bearish  stocks; hence the 120/20 designation.

He tells you he can make money on  the stocks that go up, and he tells you  he can make money on the stocks that  fall. And I’m telling you I’ve got a great  bridge in Brooklyn that you must buy.

Goldman’s brilliant strategy is that a  Goldman man can make a profit on the  stocks he likes as well as the stocks he  doesn’t like, and he can put 20 percent  more money to work in his top picks.  What a crock of soggy corn!

If your broker sincerely believes that  this leverage can increase your upside  potential without increasing your risk,  then he should be fitted for a canvas  jacket.

Please address your financial questions  to Malcolm Berko, P.O. Box  1416, Boca Raton, Fla. 33429 or  e-mail him at malber@adelphia.net.