Goldman's Lost Decade

There has been much discussion in the blogosphere about whether Goldman Sachs should go private. (A good summary can be found here.) One could forgive such wistful thinking today, as shares of Goldman fell below its initial public offering price.

When Goldman went public in May 1999, at $53 per share, it was a watershed event. The firm was the last big Wall Street partnership to go public. The decision to go public had set off intense debate within the firm and ultimately led to the resignation of Jon Corzine, the co-chairman and co-chief executive who had pushed for an I.P.O.

Under Corzine's successors, Henry Paulson and then Lloyd Blankfein, Goldman and its stock price advanced to new heights. The shares traded as high as $248 last year.

But like other financial stocks, Goldman shares have been battered by the credit crunch and the evaporation of business in markets and deals. The stock has fallen nearly 40 percent this month alone.

Today, the shares fell to a low of $52.35 before hovering around $53 by midday.

The recent sell-off is bad news for the sage of Omaha, whose investment in Goldman was seen as a rare bright spot in a gloomy sector. In September, Warren Buffett bought $5 billion of Goldman's perpetual preferred stock. He also received warrants that give him the right to buy $5 billion of Goldman's common shares at $115 per share over the next five years. At the time, that price was 8 percent below the Goldman share price. It is now deeply underwater

Buffett, to be sure, is a long-term investor. So he may not be paying attention to the stock dogs of the day, but instead watching some real pups.