Maybe LEH followed their own investment advice. http://www.lehman.com/who/intellectual_capital/deep_value.htm A Tactical Case for Deep Value Growth temporarily gives way to value 11 April 2008 Highlights * Financials now comprise nearly 80% of deep value stocks (figure 1) * High-growth stocks trade on a 50% premium to low growth, above the 20-year average premium of 40% * Large-cap stocks have also strongly outperformed â they currently trade at PE parity with mid caps; normally they trade at a 20% premium * It is hard to make the case that growth stocks look cheap anymore * There is a significant overlap between our list of deep value stocks and the Lehman Brothers Global Recommended Portfolio We have had a long-standing bias in favor of growth stocks in our global style allocation, and over the past year this hasClick to enlarge image worked out well. However, we now make a case for going overweight deep value and underweight growth for three main reasons: 1) The earnings revisions of value stocks have reached an all-time low relative to growth stocks; in fact, there have been no material downgrades for growth stocks as yet. 2) Value has become synonymous with financials, which we think are set to outperform. 3) Growth stocks are no longer cheap. That said, the evidence supports a tactical shift, not a strategic one. Styles are persistent â we have observed that when styles start to perform, the trend tends to remain intact for a long time, often years.
This is what really surprises me. GS and others were sure to get their statements out, over the last week or so, that they were still willing to do business with them. But I suppose if you were to go one layer deeper, you could say that GS said they weren't going to do business with BSC because they were short, and they said they would do business with LEH because of how obvious it looked back in March.
I agree it sucks for people who naively expect jobs for life. However this is economic Darwinism in action - firms that don't manage their risk eventually get taken out. Maybe next time they should check the corporate policies & culture before they take a job? Overall it is good for marginal firms of reckless gamblers to fail - it leaves the money in the stronger, wiser, more experienced and conservatively managed hands. 10 years from now people will look back at this era and wonder how it went on for so long. The day of reckoning draws nearer, only the strong will survive.
Its not darwinism it is theft. If it was darwinism you wouldnt have taxpayer trillion dollar bailouts,right? This is communism at best.Privatized profits,socialized losses. That poor lehman or bsc worker who loses a great deal of compensation and stock and then has to pay through his taxes for the bailout.Double scammed.
I observe about a 3 % gap in the USDJPY exchange rate a few hours ago. I don't know if it is related. http://www.bloomberg.com/apps/news?pid=20601087&sid=a5UhVttMXBPU&refer=home Lehman Inches Toward Bankruptcy After Potential Buyers Drop Out By Yalman Onaran and Craig Torres Sept. 14 (Bloomberg) -- Lehman Brothers Holdings Inc. moved closer to filing for bankruptcy after Barclays Plc and Bank of America Corp. abandoned talks to buy the U.S. securities firm and Wall Street prepared for its possible liquidation. Barclays, which had emerged as a leading candidate to acquire Lehman, pulled out first, contending it couldn't obtain guarantees from the government or other Wall Street firms to protect against potential losses on Lehman's assets. Bank of America withdrew about three hours later, according to a person with knowledge of the talks. Banks and brokers began consolidating trades in which Lehman is involved to minimize the impact of a possible bankruptcy filing tonight. The U.S. Treasury and the Federal Reserve have struggled for three days to prevent the investment bank from failing before markets open tomorrow, people familiar with the situation said. With the two most serious bidders out of the picture, Lehman's options are few. ``The best case is that the Fed offers a 48-hour standstill by backing Lehman's liquidity directly to win time for other bidders to come forth or the previously interested parties to reconsider,'' said Sean Egan, president of Egan-Jones Ratings Co. in Haverford, Pennsylvania. ``The worst case is bankruptcy, and Lehman goes down the tube.'' Barclays walked away because it couldn't get guarantees from the government or agree on a private-sector deal to mitigate what it called Lehman's ``open-ended'' trading obligations, Leigh Bruce, a spokesman for the London-based bank, said in a phone interview today. Bank of America spokesman Scott Silvestri declined to comment. The Wall Street Journal reported that the bank had entered into merger talks with Merrill Lynch & Co., citing unidentified people. Swaps and Derivatives The International Swaps and Derivatives Association, which has 218 banks as members, said in a statement today that it held a so-called netting session on Lehman trades to prepare for the New York-based firm's bankruptcy. The trades during the session will be annulled if there's no bankruptcy filing as of 11:59 p.m. in New York today, ISDA said. Wall Street executives arrived at the New York Fed building in lower Manhattan this morning for a third day of discussions about a rescue plan. Among those present were Citigroup Inc. Chief Executive Officer Vikram Pandit and Robert Wolf, chairman for the Americas at UBS AG. JPMorgan Chase & Co. sent CEO Jamie Dimon, Investment Bank Co-CEO Steven Black and General Counsel Stephen Cutler. Lehman's bankruptcy wouldn't have as big an impact as the bankruptcy of Fannie Mae or Freddie Mac, Bear Stearns Cos. or Countrywide Financial Corp., Egan Jones's Egan said. ``What the market has been telling us is that Lehman's equity and assets don't cover its liabilities, so the debt isn't worth 100 cents on the dollar,'' said Egan. ``That means credit default swaps on Lehman's debt will be triggered.'' Sealing Off Losses Barclays's takeover approach depended on sealing off losses from Lehman's mortgage-related holdings, according to people familiar with the talks. New York-based Lehman has lost 94 percent of its market value this year after record losses from investments tied to mortgages. ``Barclays has its own problems,'' said Bruce Foerster, president of South Beach Capital Markets in Miami. ``So it's possible they realized they can't do this without government aid.'' The U.K. bank, which has taken $7.6 billion of writedowns on its mortgage positions in the past four quarters, raised 4.5 billion pounds ($6.4 billion) in a share sale in July. The bank's 5 billion pounds of buyout loans and 12 billion pounds of commercial mortgages may spur further markdowns, Collins Stewart analyst Alex Potter said last week. `Wasn't Willing' Barclays said it was approached by the U.S. Treasury at the end of last week and saw in Lehman ``a potential opportunity to significantly enhance our investment banking and investment management franchise in key areas.'' ``The proposed transaction required a guarantee for the trading obligations of Lehman Brothers which was potentially open-ended,'' Barclays said in a statement. ``Barclays wasn't willing to assume such an open-ended obligation.'' New York Fed President Timothy Geithner, 47, and U.S. Treasury Secretary Henry Paulson, 62, were pushing Wall Street to contribute money to a so-called bad bank that would assume at least some of Lehman's $50 billion of devalued real estate assets. That would have made it easier for a buyer to take over the rest of the company while the assets were sold off. The approach was similar to one Lehman presented to investors last week, which the company said would cost $5 billion to $7 billion. The firm's mortgage-related assets have a face-value of about $74 billion before writedowns, based on figures the firm has reported. About another $10 billion of high-yield leveraged loans have been marked down to $7 billion during the past year, as market prices for the debt sank. Fuld Forced Led by Chief Executive Officer Richard Fuld, Lehman may be forced to liquidate unless buyers step up for all or part of the 158-year-old company, Paulson and Geithner told the heads of Wall Street's biggest firms at a meeting Sept. 12. Paulson has said he's reluctant to use government money to rescue Lehman. Fuld, who built Lehman into the biggest U.S. underwriter of mortgage securities during his four decades at the investment bank, was forced to consider a sale this past week after talks about a cash infusion from Korea Development Bank ended, eroding investor confidence and the company's market value. Unlike when the Fed committed $29 billion to help JPMorgan take over Bear Stearns Cos. in March, Lehman has access to a lending facility for brokers that would permit an orderly process for unwinding the firm, the person said. Paulson stepped in last week to guarantee the debt and mortgage-backed securities of home-loan financing companies Fannie Mae and Freddie Mac. Weil Gotshal Lehman hired the New York law firm Weil Gotshal & Manges LLP to advise the company on a potential bankruptcy filing, the Journal reported yesterday, without saying where it got the information. The government is probably concerned that panic may spread to other financial institutions, Ladenburg Thalmann & Co. analyst Richard Bove said. American International Group Inc., the largest U.S. insurer, and Seattle-based lender Washington Mutual Inc. each plummeted in New York trading last week on speculation about their financial health. AIG may move up plans to raise capital or sell assets after the shares plunged 46 percent, according to a person familiar with the company. WaMu, which fell 36 percent, may sell parts of its nationwide bank-branch network to raise cash, according to L. William Seidman, a former chairman of the Federal Deposit Insurance Corp. To contact the reporters on this story: Yalman Onaran in New York at yonaran@bloomberg.net; Craig Torres in Washington at ctorres3@bloomberg.net Last Updated: September 14, 2008 16:55 EDT
But I thought Uncle Sammy had my best interest in mind? Ain't he supposed to be my best friend, if not yours, ours, and possible theirs, whoever that may be? ROTFLMAO!