September 15, 2008

The end of an era

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Woke up this morning and heard the news that Lehman Brothers is looking to file Chapter 11, after failing to successfully conclude any deals over the weekend. Simultaneously, BofA announced a buyout of Merrill Lynch. As if that wasn't enough, news leaked that AIG had asked the Fed for a $40Bn loan.

The news had a big impact on me. Having spent time at Lehman, I always regarded it as a firm with good risk management, and I felt there was a clear distinction between it and Bear Stearns. I certainly did not expect that the fortunes of Lehman would spiral downward as quickly as it had been for Bear in its last days. It is very sad. BofA did a very good trade by going with Merrill instead of Lehman. It was the smart choice, and now it will dominate the retail market in the US even further.

While the Merrill brand name is very strong and recognizable, I can't help but wonder how long it would take for it, too, to disappear - gone the way of Shearson, Salomon, and Paine Webber. Of all the old bulge bracket names, only Goldman Sachs and Morgan Stanley still remain independent.

What will this financial crisis bring next? I shudder to think of the possibilities. I shall open a nice bottle of wine tonight in memory of one of the great names of Wall Street... L'Haim!

1 comment:

Peech said...

The bottle I opened was the 2001 Williams Selyem Pinot Noir Hirsch Vineyard, in honor of the year that I joined Lehman.

Initially the high alcohol (14.2%) was really evident in the nose. Smoky grilled meats, prunes, black fruits, sweet on the nose but not excessively so. Tannins were velvety and smooth, giving good body to the wine.

After almost 3 hours, minerals and blood emerged among the powerfully sweet fruit nose. A bit of bacon fat came out later.


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