When it comes to principal investments, Morgan Stanley (NYSE: MS) gambled big on the Revel casino development project in Atlantic City, and lost its shirt. In the third quarter, its earnings lagged expectations by a substantial margin, in part because of a $229 million loss for costs associated with exiting the Revel development.

The third-quarter Revel charge off comes after a $932 million charge off on the investment booked in the first quarter. The value of the project has declined over the years from $1.2 billion to just $40 million.

Goldman Sachs (NYSE: GS), on the other hand, has maintained its winning ways when it comes to principal investments. For the third quarter, it recorded a $754 million gain compared with a $943 million gain in the second quarter. The third-quarter gain reflected in part the sale of its stake in Industrial & Commercial Bank of China.

There was a day when Goldman was able to book a large investment gain in just about every quarter, boosting earnings substantially. Morgan Stanley would like to follow suit, but it's casino bet does not bode well.

For more:
- here's a look at Morgan Stanley's third quarter results from Bloomberg

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