September 15 2008 was one of the most extraordinary days in global financial history.A simmering credit crisis exploded into a full-blown apocalypse in the global financial sector when Lehman Brothers filed for bankruptcy.
With assets of $639bn and a further $613bn of debts, it was the biggest corporate bankruptcy in the US. The collapse of Lehman had immediate repercussions, frightening financial markets around the world, but with hindsight its demise has come to embody the failure of investment banks to adequately assess risk and invest accordingly.
Market Performance (from the close before Lehman BK) – Silver +71%, Gold +61%, S&P +58% ( For S&P the dividend are not accounted for. Including dividend it will be close to 88%)
Here is a must watch documentary of 60 min : “The West is done, it’s over! We screwed it all up. Do you want your great-grandchildren speaking Chinese 🙂
I do not write much on personal finance, and I doubt how many investors have the visibility on these 7 factors to invest in the mutual funds.
Seven Factors to Consider:
- Management Stability: If you find a great manager, hang on to them. Top managers usually continue to perform better in up and down markets, because they have the stability and experience to stay focused on their objective. Let them work for you and enjoy the stability.
Management Participation: The management team of a great mutual fund usually invests heavily in their own fund. If it is good enough for their money, you can expect that they have a vested interest in taking care of yours. Continue reading “Mutual Fund Selection”
I do not know why but somebody wanted me to define some basics on Yield spreads, that whether Yield spreads can judge the risk environment in an economy ?
Yield spreads are good tools to judge the risk environment in an economy a lower yield spread means that the issuer of debt is in a situation to demand loans at a lower spread above the yield of government security which in turn shows the presence of ample liquidity.
As far as economic growth is concerned a lower yield spread indicates greater amount of liquidity available for growth Continue reading “Yield Curve Basics”
Continuing from my yesterday’s post why Central clearing is one of the solution if we just analyse recent crisis.In the financial crisis of 2008, banks feared that their trading partners might not be able to meet obligations to make good on the credit-default swaps,and on derivatives plus other financial arrangements. The situation set off a chain reaction that paralyzed global markets until governments and central banks provided enormous financial support.
Continue reading “Central Clearning Of derivatives & Dodd – Frank continues…”
Takings from my last post A Prop Trader or Rogue Trader and my past posts on the same topic The Rogue Trader or The Rogue Banks and TO BE A ROGUE TRADER would like to share few more views over them. As I reveled in the past that prop trader don’t trade on behalf of clients but they use institution own money to trade.They speculate and their focus are is emerging markets.
The two principles on which they work :
- You need to be dispassionate about your trade, to control your internal hurdles that may attach you to it emotionally.