Category Archives: Risk Management

Economy, Finance, Investments, MyOrbit Blogs, People, Risk Management

Wall Street Crash, October 1929

This post is probably the most valuable post on this website, for the amount of history, learning, wealth and losses it captures, and lessons that are as relevant today, as they were in the Wall Street Crash, October 1929. Please read and share. Thanks.

Claud Cockburn, writing for the “Times of London” from New York, described the irrational exuberance that gripped the nation just prior to the Wall Street Crash, October 1929 and the following Great Depression of the 1930s, the bread lines, the apple sellers, etc. As Europe wallowed in post-war malaise, America seemed to have discovered a new economy, the secret of uninterrupted growth and prosperity, the fount of transforming technology:

“The atmosphere of the great boom was savagely exciting, but there were times when a person with my European background felt alarmingly lonely. He would have liked to believe, as these people believed, in the eternal upswing of the big bull market or else to meet just one person with whom he might discuss some general doubts without being regarded as an imbecile or a person of deliberately evil intent – some kind of anarchist, perhaps.” Continue reading →

Business Strategy, Market News, Risk Management

Lehman Brothers Case Study

This is an ongoing post to study what exactly happened to Lehman Brothers.

Sep 15, 2008: Lehman Brothers was the 4th largest investment bank in the world. Why was Hank Paulson smiling the day Lehman Brothers was declared bankrupt? Did he play a role in the denial of US Govt support for Lehman Brothers at a critical juncture? Nobody knows that. But what one surely knows is that Hank Paulson is ex-Goldman Sachs and Goldman Sachs is a long term beneficiary of Lehman Brothers fall. Agreed that Lehman had much higher leverage (about 40x) than its peers (20x), so their balance sheet was much higher in risk. But if US Govt could support other large financial organizations like AIG, Fannie Mae and Freddie Max, maybe they should have offered some “short term support” to Lehman Brothers too. In credit crunch situation, time is all that one needs, and with a bit of time, Lehman could have got a chance to get sell some of its assets to raise capital or raise fresh capital from its long term investors globally. The US Govt’s/ Fed’s attitude of “not a single dollar to support you” towards Lehman Brothers was not logical and it harmed the global financial markets, including US economy. Continue reading →

Capital Markets, Economy, People, Risk Management

US Economic Outlook from Ben Bernanke Federal Reserve Chairman

http://t2.gstatic.com/images?q=tbn:ANd9GcRYRikgVavQhwfAfteQ8cFDD4cX0x7l2CfkrhEkHdfNngg3NiNrzQIt has been three years since the beginning of the most intense phase of the financial crisis in the late summer and fall of 2008, and more than two years since the economic recovery began in June 2009.

There have been some positive developments: The functioning of financial markets and the banking system in the United States has improved significantly. Manufacturing production in the United States has risen nearly 15 percent since its trough, driven substantially by growth in exports; indeed, the U.S. trade deficit has been notably lower recently than it was before the crisis, reflecting in part the improved competitiveness of U.S. goods and services. Business investment in equipment and software has continued to expand, and productivity gains in some industries have been impressive.

Nevertheless, it is clear that, overall, the recovery from the crisis has been much less robust than we had hoped. Recent revisions of government economic data show the recession as having been even deeper, and the recovery weaker, than previously estimated; indeed, by the second quarter of this year–the latest quarter for which official estimates are available–aggregate output in the United States still had not returned to the level that it had attained before the crisis. Slow economic growth has in turn led to slow rates of increase in jobs and household incomes. Continue reading →

Artificial Intelligence, Capital Markets, Finance, MyOrbit Blogs, Risk Management, Software

Thoughts On 1000 Point Fall in Dow Jones

http://graphics8.nytimes.com/images/2010/05/07/business/07trade_graphic/07trade_graphic-popup.jpg

Create a massive fall in the market large enough to trigger stop-losses typically set up at 5% drop, and then buy blue chip stocks at 30% less price before they recover, sell Put Options at 1000% gain, blame it all on computers and trading algorithms. Some person or some company somewhere has walked away with billions in profits after this event. It looks very well planned. This event was most probably an example of higest form of market manipulation, a bold master stroke, though illegal and unethical.

To find answers, we need to check the money-trail. Continue reading →

FAQ, Internet, MyOrbit Blogs, Risk Management

Important: Please Protect Your Email Ids

Hi Folks, over the last 6 weeks, we have observed that the email ids of many people in our extended network have been hijacked by hackers. While Hotmail seems to be the easiest to crack, we have also seen Yahoo and Gmail ids hijacked.

Its a real problem once your email id goes this way, because the hackers get access to your email id and change the password, and use your address book to send lots of spam mail from your id, and you will be forced to spend lot of time in damage control.

So to protect your email ids, please change your password ASAP if you have not changed it in the last 2-3 weeks, and keep it cryptic. This is the best protection.

And to protect against any key-logging script that may have come on your computer from somewhere, please regularly delete all cookies and Internet temp files, and run anti-virus once every week. Let us know if you want any help.