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Morgan’s worst insult? Goldman’s results

As if the terrible results announced today at Morgan Stanley weren’t bad enough, Goldman’s success this quarter must feel like a slap in the face at Morgan.  Witness the numbers.  Morgan took a $9.4Bn mortgage write-down in its fiscal fourth quarter.  Goldman didn’t take a hit when it reported results on Tuesday.  MS had a loss of $3.6Bn in the quarter; Goldman earned $3.2Bn.  In advisory M&A revenues this quarter Morgan Stanley lagged Goldman Sachs.  Mack won’t take a bonus this year and Blankfein will walk away with $70Mn this year.  Their success in the face of their competitors failures just rubs the rest of the street’s faces in the mud.     

 

 

 

 

 

 

 

Its difficult to say if Goldman was smarter or just luckier than the rest of The Street.  Morgan Stanley under Mack has moved aggressively to take more risk.  However, it appears that the press is assessing the prudence of that risk based on the outcome only.  What if the market went Morgan’s way and not Goldman’s way.  Then GS would be hurting and the press would be saying it should take lessons from Morgan Stanley?  Both firms placed their bets but what do we infer from the outcomes met by both firms.

Mack started out in the bond business at Morgan Stanley, which has always lacked the luster of IBD and IED at Morgan.  Its ironic that the lousy quarter was the result of “isolated losses by a small trading team in one part of the firm.”  In Mack’s rush to take risk like GS, the bond business at Morgan Stanley, a business Mack grew up in, burns him.

 

 

 

 

 

 

 

 

 

 

 

© 2007 Prince of Wall Street.