Thats a drop from nearly 9000 million, or just 1/3, without even writing off any of the toxic waste on the books. So even if Paulson buys all their toxic waste with taxpayers money, their future earnings is drastically reduced. Their present value is based on previous earnings, with projected growth. This is the reality check for GS investors. Their real future income is 1/3 at best, and without growth, for at least 3 to 5 years. If you are generous, 1/3 of 125 is about 42. So you looking at 40-45 tops. Lower end, depending on the write offs, is 0.
Buffett just about broke all his own rules on investing with GS
1. Never trust a company that pays its own execs millions. GS pays its own execs billions. 2, Never trust a company that pays a large part of its revenue to its execs. GS pays 50% of revenue. 3. Company must have good business model. GS business model is selling toxic waste to themselves with borrowed money. Billions of it. 4. Only invest in companies with strong franchise. GS franchise is selling toxic waste to themselves with borrowed money. Well no one can get anywhere near it. Not that they want to. Oh yea there is the Treasury Sec Paulson, but he wont be around in another 3 months. So no franchise there either. 5. Other clients? As long as GS can sell toxic wastes to themselves, they have clients. Without it, they are just overpaid stockbrokers pretending to know something about finance. So no franchise there. They have less of a franchise than Schwab, E-Trade, etc. On top of all that, their balance sheet is BS.