Archive: September, 2008
Down, up, down, up.
Welcome to the stomach-churning thrill rides that are the U.S. financial markets right now.
Despite yesterday’s 410.03-point take-off for the now American International Group-less Dow Jones industrial average, the credit crisis is still very much with us.
Fresh from the Wharton School's faculty is some advice for individual investors.
In my columns this week, I've tried to both let you know how serious the credit crisis has become and to warn you against panicking over your losses.
Should I buy gold?
Are my Ginnie Maes safe?
How do I know if my bank is solid?
There are some things worth noting in the non-financial trauma business world.
One is a report on New Jersey's biotechnology industry that BioNJ and Ernst & Young have produced. It shows the number of biotech firms operating in the state at 238 in 2008, up from 226 in 2006.
New Jersey has 32 public biotech companies that generated 2007 revenue of $3.2 billion. The report estimates that total revenue, including from privately held biotech firms, was $5 billion.
As bad as the events in the financial markets have been over the last few weeks, the risk that the credit markets will spiral downward has increased.
That’s what Nigel Gault, Global Insight’s chief U.S. economist, said on a conference call yesterday. You may wonder how things could get worse. Welcome to the “negative feedback loop”:
As lenders worry about their prospects, they lend less. With fewer loans, the economy slows down. That results in more job losses and higher unemployment rates. Mortgage delinquencies and foreclosures rise, while housing prices fall. Lenders become less likely to lend and on it goes.
I was prepared for some defining moment for Lehman Bros. over the weekend. And there were enough whispers involving Merrill Lynch so I wasn’t shocked that it sought comfort in the arms of another.
But American International Group’s $40 billion distress call threw me for a loop.
Three huge names in the financial-services business cried uncle the same weekend. How would U.S. investors react to this latest crisis?
I'm not sure how many people in the Philadelphia area heard the news about Lehman Bros., Merrill Lynch and AIG this morning and decided to make major changes in their finances, but some must or you wouldn't hear all these commentators urging people to sit on their hands.
But we all play the investor, the saver and the borrower at various times during a year. So things to keep in mind right now:
1. If you have a Merrill Lynch or Lehman Bros. brokerage account, you should be fine. The Securities Investor Protection Corp. notes that the bankruptcy filing involving Lehman Bros. Holdings Inc. does not directly affect the broker-dealer called Lehman Bros. Inc.
What does $125 billion look like?
Save for a serious payroll error, none of us will ever see that many zeroes.
But this week at the Convention Center, there will be 93 private-equity firms who oversee that much capital attending the 2008 M&A East conference.