Wall Street Winces at Writedowns

Morgan Stanley(MS) may soon join the ranks of the big writedown elite.

Shares of the brokerage firm were down nearly 6% in trading Wednesday. At their intraday low just above $50 a share, Morgan Stanley shares have lost a quarter of their value in the five trading days since Halloween.

The plunge comes as Wall Street analysts race to predict the next big brokerage firm to be whipsawed by steep losses on mortgage-backed securities and related holdings. Rival Goldman Sachs(GS) has also seen its shares dragged down by speculation that the two institutions were not as untouched by the mortgage market collapse as many had previously believed.

The concerns follow last month's multibillion-dollar writedowns at Merrill Lynch(MER) and Citigroup(C), which sparked two high-profile CEO ousters.

Shares of Goldman Sachs are down more than 4% Wednesday and nearly 7% thus far this week, despite the firm's denial of rumors that it has more exposure to the collateralized debt market than has been previously disclosed.

Several analysts took a stab this week at estimating fourth-quarter writedowns for Morgan Stanley and the other large brokerage firms, though most acknowledge that their stab is slightly in the dark. Information on the exact levels firms are exposed to collateralized debt obligations (CDOs) and structured investment vehicles (SIVs) are fuzzy, at best.

The estimates for Morgan Stanley's possible fourth-quarter writedown range from CreditSights' $3.8 billion, to Deutsche Bank analyst Michael Mayo's $3 billion to $4 billion to Fox-Pitt, Kelton's David Trone's $6 billion -- though all noted the low level of information available.