Goldman Loses Billions in Bad Bets on Stocks
How tough has it been to make money in this nasty, volatile stock market? Even Goldman Sachs took a bath on its investments over the last three months.
Wall Street's most powerful investment bank booked a steep loss for its most recent quarter -- only the second quarterly loss in its entire history as a public company -- hurt partly by a holding in China's biggest bank that went south.
For the three months ended Sept. 30, Goldman Sachs (GS) swung to a loss of $428 million vs. a year-ago profit of $1.7 billion.
Turbulent markets, a dearth of deal activity and a drop in I.P.O.'s and new debt issues have weighed on all investment banks this year. But some bad bets made by the smartest guys on the Street took a toll on profits, as well.
Goldman Sachs took a loss of more than $1 billion from its investment in the ordinary shares of Industrial and Commercial Bank of China (ICBC), China's largest bank. Shares in ICBC (IDCBY) plunged more than 35 percent during the third quarter.
True, Goldman Sachs initiated that stake back in 2006, but other parts of its private equity portfolio stunk, too.
The firm suffered net losses of $1 billion from other investments in stocks -- primarily in public equities -- as well as net losses of $907 million from debt securities and loans.
Even the Great Vampire Squid got squished by the market last quarter. No wonder regular folks remain leery of stocks.
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