Today's heresy - which I find
particularly annoying because it is so lazy intellectually - is claiming that
volatility equals risk. What rubbish! Risk is when a company goes belly-up, a
currency goes against you, or a country turns sour, such as Cuba; that is, the
possibility of permanent loss of capital - which has nothing to do with
inevitable fluctuations of the market.
"The heresies and swamis that can hurt your portfolio"
John Train
Financial
Times
June 28, 2008
Can banks add value? Should investors ever care?
News
reports about Lehman Brothers (NYSE:LEH) possibly being sold to Barclays
(NYSE:BCS) actually pushed the firm's valuation down by the close
yesterday. To us, the implosion of houses such as Bear, Stearns, LEH
and, yes, eventually even Goldman Sachs (NYSE:GS) suggests that this pure "agent" institutional dealer
business model may be doomed. Are the other heavy users
of leverage residing in hedge fund land next?
We know that the larger universal banks are looking for
ways to add value, looking at what business lines make sense