As expected, Goldman Sachs reported today that it lost $2.12 billion in its latest quarter, averaging out to $4.97 per common share.  The full report can be viewed here, but a shamefully hilarious excerpt follows, along with [Geldpress comments]:

Goldman Sachs reported fourth quarter negative net revenues of $1.58 billion and a net loss of $2.12 billion.  The diluted loss per common share was $4.97 compared with diluted earnings per common share of $7.01 for the fourth quarter of 2007 and $1.81 for the third quarter of 2008.


[Geldpress:  With statements like these, Goldman Sachs continues to insist that they "earned" money in 2007, and that their financial woes only just recently started.  In reality, their executives walked away in 2007 with tens of billions of dollars in faked earnings, and then begged U.S. taxpayers to compensate them for the real losses]

The Goldman Sachs fourth quarter revenue results can be broken down as follows:

  • Investment Banking – Consists of investment banking, financial advisory [Goldman advice to clients - Drive your company and the economy into the ground and then beg taxpayers for a bailout], and underwriting.  Revenues in these three components were all down significantly for the quarter – 20%, 54% and 37% respectively.
  • Trading and Principal Investments – Negative net revenue of $4.36 billion.  With results like this, it’s no wonder their financial advisory business was down 54%.  Perhaps Goldman Sachs needs to learn that trading is not a sustainable business, but rather a market sum game.   According to Bart Stupak, Goldman Sachs made its money in trading only through heavy manipulation.  Now that they are under increased scrutiny, it will be to difficult for them to make any money from market manipulation pumping and dumping shares trading activities in the future.
  • Asset Management and security services – revenues were 19% lower in the quarter for asset management and surprisingly 19% highre for securities services.

With results like this, I would hardly call the gang at Goldman Sachs geniuses.  Just like every other short sighted real estate and financial services company, they cracked under the pressure to increase earnings.  They embraced financial engineering to the extreme and managed to look really good on paper for a few short years.  But the facade has come crumbling down, and Goldman Sachs is left scratching their heads, and completely confused as to what their business model for making money should even be in the future.  In the meantime, their greedy little hands are outstretched and pointing upward, willingly taking in every last cent they can squeeze from hardworking taxpayers.

*Warning: Don’t be fooled into embracing Goldman Sachs just because Warren Buffett is aggressively buying shares.  Remember, he is also buying shares of Moody’s.  Warren Buffett is brilliant, but even brilliant people make foolish gambles.  It turns out that Warren Buffett is making at least two.

Disclosure: The author does not currently own GS or MCO but may trade their shares in the future, but just for fun.

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