Bear Stearns, Lehman...kthxbai

[NocturnalRob]

I wanted to start a thread on this just so people can express their own viewpoints about what's going on this morning. I'm getting opinions from all sides at the office, but I've read some fairly intelligent market commentary on this forum and thought some of you might have some insight into what's going on, what might happen, etc.

Obviously, the i-bank market is about to eat a massive shit sandwich. Living/working in NYC, I am thrilled that I have a solid job with no signs of implosion (although there rarely are until it's too late). In the last two weeks, I've had 6 friends get fired from or forced to leave their jobs due to fund liquidation. Any thoughts on what this will do (grad school applications up obviously--so much for applying for an MBA next year)?

Just looking for any opinions/insights/etc, just to get a conversation going.

[Gan]

GG JPMorgan Chase!

Banks/Funds that have been compromised by overextending in the securitized market are now vulnerable and desireable for takeover by those who are not overextended.

Countrywide/BoA also comes to mind.

Rhett was making fun of someone on OOC who bought B&S stock on Friday thinking to catch a profit in a brief dip in pricing, that was before the buyout announcement of $2 a share by JPM Chase.

Think of it as reshuffleing the deck.

There will be a new and interesting game in town by '09.

[Trouble]

What is an investment bank as opposed to a brokerage or a normal bank? Do they only have investment companies/brokerages as clients?

Do you think any mutual fund type investment companies will collapse too (I use T Rowe Price, for example).

[Parkbandit]

From $170 a share to $2 a share in just over a year.

OUCH.

[NocturnalRob]

From $170 a share to $2 a share in just over a year.

OUCH.

Joe Lewis is likely pissed.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/10/bcnlewis.xml

[Daniel]

What is an investment bank as opposed to a brokerage or a normal bank? Do they only have investment companies/brokerages as clients?

Do you think any mutual fund type investment companies will collapse too (I use T Rowe Price, for example).

Not exactly. It's not a bank in the typical sense of the word. They simply leverage their assets to make investments in all kinds of things.

I don't imagine that companies like T Rowe Price will fold. As, an example they are usually one of the better companies that looks at the long term and doesn't jump on the bandwagon or over expose themselves. The problem with B&S was simply that they invested too heavily in the Real Estate Market and that their Asset to Equity ratio (I.e. how much they had invested vs how much they actually had) was wayyyyy out of whack.

If anything, I think the long term effect you'll see is that the market will stop over projecting themselves. Or else I hope so.

[Parkbandit]

Joe Lewis is likely pissed.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/09/10/bcnlewis.xml

:rofl:

PWNED

[NocturnalRob]

The problem with B&S was simply that they invested too heavily in the Real Estate Market and that their Asset to Equity ratio (I.e. how much they had invested vs how much they actually had) was wayyyyy out of whack.


20x leveraged. That is completely fucking retarded. I mean, I'm not all that risk averse either, but seriously? At least leave yourself an plausible exit.

[Daniel]

People are greedy. It's something I don't relate to and why I don't think I could ever work in Manhattan.

[NocturnalRob]

People are greedy. It's something I don't relate to and why I don't think I could ever work in Manhattan.

Well, I don't think it's fair to say that you can't work in Manhattan without being greedy. Also, I think there's a difference between knowing the value and importance of money (which is where I think I fall) and being greedy.

But I will agree with the general principle of what you're saying. I have quite a few friends in the I-banking world, and some of the stuff they do for money is completely out of my realm of consideration.

[Daniel]

I wasn't trying to characterize every person in the industry. It's simply a personal thing.

I try and be the best at everything I do and I wouldn't feel comfortable in an environment where those who are rewarded the most are like that. I mean, if I could get a job with Berkshire Hathaway..than maybe ;)

[TheEschaton]

I don't understand most of the Manhattan business world. My sister is peripherally in that world, on the marketing end, and even that's fucking crazy to me. My dad is a commercial or an i-banker (I'm never really sure what the difference is, if there is one), but his job isn't in any danger. However, he's been very unhappy for the past half year. His bank didn't even invest in the subprime market, but the malaise has spread throughout the whole industry.

-TheE-

[Allereli]

I wasn't trying to characterize every person in the industry. It's simply a personal thing.

I try and be the best at everything I do and I wouldn't feel comfortable in an environment where those who are rewarded the most are like that. I mean, if I could get a job with Berkshire Hathaway..than maybe ;)

if you're using "than" wrong then I would count out a job with BH

[TheEschaton]

I don't think Warren Buffet cares.

[Daniel]

I apologize for not triple checking my responses in the quick reply box. What was I thinking? My career is over.

[NocturnalRob]

His bank didn't even invest in the subprime market, but the malaise has spread throughout the whole industry.

well, i disagree with the word "malaise." i think people know why they're fucked, so I think it's an overall panic. because they're fucked and there's nothing they can really do to stem the tide.

and as we all know, the market is inter-connected in too many ways to fully comprehend (at least for me). there are still plenty of ways to make money in the market, but everyone is so fearful of losing their job/losing money that the majority is afraid to do anything risky.


if you're using "than" wrong then I would count out a job with BH

OMG!! TYPO!!!11!!!!!1! ON A MESSAGE BOARD!!!

[TheEschaton]

Malaise was my own word, but then again, I'm suspicious of the free market to begin with. ;)

It is funny how interconnected - you would think his competitors tanking would be a good thing for him.

-TheE-

[Daniel]

I believe in the free market.

What I don't believe in is the artifical economy that we've built ourselves.

[NocturnalRob]

artifical

careful...Allereli's gonna get you!!

[Daniel]

Today will forever be marked as the day my life went to shit.

[NocturnalRob]

Today will forever be marked as the day my life went to shit.

Too heavily invested in BSC?

[Daniel]

Nah. Most of my money is invested out of the country.

[NocturnalRob]

Nah. Most of my money is invested out of the country.

I moved my entire 401(k) into emerging markets and European funds in January. I fucking rule.

[Gan]

GG JPM!

Up 4 ticks this morning.

:)

[Apotheosis]

yeah, I'm looking into foreign currency, I'm pretty sure the euro will hit 2$... not sure when though.

[BigWorm]

I moved my entire 401(k) into emerging markets and European funds in January. I fucking rule.

ROI is really nice with emerging markets (especially the BRIC countries and their like), but even as a young investor, the risk is worrying, though I suppose you have the European funds to counterbalance that.

I've just moved into a nice job and I am working on eliminating most my debt right now, but I have a small nest egg with a friend of the family who is ridiculously good at finance. He usually does high net worth investors (atleast $1mil to invest), but since he's a friend, he took on my portfolio as well.

[Stanley Burrell]

It's Tijay's fault.

I took courses at Lehman. It's a good school.

[Warriorbird]

Adversity = opportunity. In this case an opportunity to correct spelling.

[NocturnalRob]

ROI is really nice with emerging markets (especially the BRIC countries and their like), but even as a young investor, the risk is worrying

it's because i'm a young investor (27), that i'm willing to take that kind of risk early on.

[Allereli]

OMG!! TYPO!!!11!!!!!1! ON A MESSAGE BOARD!!!

it was more the context of the typo. back to your e-peen measuring through your portfolios

[Parkbandit]

it's because i'm a young investor (27), that i'm willing to take that kind of risk early on.

Eh.. I would be leery of investing too much of my portfolio in Europe.

[TheEschaton]

That's because you're an idiot.

[Warriorbird]

I would be too. Southeast Asia bit me a while ago.

[BigWorm]

it's because i'm a young investor (27), that i'm willing to take that kind of risk early on.

I'm totally with you. I'm younger than you (24), so I invest pretty aggressively, but the inherent volatility of emerging markets is what offers the possibility of a huge ROI. This is why I'm diversified so much, and I don't really have a lot of capital to throw around quite yet, which limits how much I can safely "play around with" for now, but I'm working on investing more money once I finish paying down my debt. I'm extremely debt adverse, but I'm willing to pay my student loans back slowly and pay that low interest rate (tax deduction anyway) while I invest more of my income at a much higher rate of return than the interest accruing on my student loans.

Basically, since you know what you're talking about, you're more confident in your decisions. Me, I'm a pussy, so I'm afraid of putting too much money in one place.

[NocturnalRob]

That's because you're an idiot.

i'm not sure who you were responding to, I'll wait for you to clarify.

Brikus, I'm of the opinion that my 20s are the time when I should be as risky as possible with regard to ROI. If I take a huge hit, I still have 30 years or so to recover. Obviously, as I age, I'll become more risk averse and less likely to invest large portions of my portfolio in investments I don't deem "safe."

I would also be interested to know why you think Europe is a bad investment right now.

[TheEschaton]

To PB, who isn't sure about the European markets.

P.S. SE Asia != Europe.

[Parkbandit]

I never said I wasn't sure. I said I would be very leery about investing too much in Europe.

[NocturnalRob]

I never said I wasn't sure. I said I would be very leery about investing too much in Europe.

I'm leery of your avatar.

[Lysander]

Europe fundamentals are a bit shakey. They have continuously under-performed in respect to GDP growth and FDI the past decade, although now they are bouncing back a little. Over the long term, like I said it doesn't look good. Big picture wise, the population over there is shrinking to no tomorrow, there is just not enough young blood to support their socialist states. In other words, their population pyramid is upside down with old people being the most and the foundation (young people), the tip on the bottom. This is a no go at least for now. Invest in England/France/Germany if you want something relatively stable and sound financial structure.

Becareful about emerging markets. What I like to do in here is to invest indirectly with these markets and sometimes at the home exchanges. For someone like you just invest in American companies who have a stake in say a Chinese company or ,to be even more conservative, in companies dealing with commodities directly tied to basic infrastructure or anything a emerging market may need. ONLY invest directly at the home exchanges IF you know what you are doing and THEN only if you got connections in these places.

[NocturnalRob]

Invest in England/France/Germany if you want something relatively stable and sound financial structure.

Last time I checked, these countries were all in Europe

[Parkbandit]

I'm leery of your avatar.


You should talk

[BigWorm]

Brikus, I'm of the opinion that my 20s are the time when I should be as risky as possible with regard to ROI. If I take a huge hit, I still have 30 years or so to recover. Obviously, as I age, I'll become more risk averse and less likely to invest large portions of my portfolio in investments I don't deem "safe."

Me, I'm a pussy,That pretty much sums it up.

[NocturnalRob]

That pretty much sums it up.

hahaha...fair enough