Way Too Big To Fail & The Most Important Investment Lesson Post Lehman

risk mgmt
Way To Big Too Fail &  Respect Risk:
People never fail to amaze me. The one constant in life and in markets is that human nature never changes. It has been 5 years since Lehman failed and the entire global financial system came to a grinding halt. What changed? What lessons have you learned? The single most important investing lesson from the 2008 debacle was the importance of ALWAYS RESPECTING RISK. The one factor all those failures had in common (and most failures on Wall Street) was that they did not respect risk. Remember, the market can not take a dime from you that you won’t let it. You can not control the upside (how high the stock will go) but you can control your downside (you are free to sell at anytime time).

Forget Too Big To Fail, We Are Now Way Too Big To Fail:

In 2008, we faced systematic risk, with too big to fail. In 2013, what’s different? One might say that we are now Way Too Big To Fail… Is that good? In the long term no. But right now, it doesn’t matter because the Fed is going to print another $4 billion before the close…and then another $4B tomorrow.
 

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