FEEDIt is getting uglier and uglier. Bear Stearns (BSC) a major Wall Street investment bank nearly filed for bankruptcy this weekend. In a fire sale, J.P. Morgan with backing from the Fed bought Bear Stearns for $2 per share. Bear Stearns closed at $30 per share on Friday. A little over a year ago, January 2007, Bear Stearns traded at $170 per share.
It is simply amazing how much wealth is being lost during this “financial mess.” Billionaire investor Joesph Lewis is light about a billion bucks since his ill-timed investment in Bear late last year. That will sting a little, but he will be OK. However, there are many regular folks at Bear Stearns who are in the red zone (0-5 years from retirement). Their retirements have been delayed, significantly modified or simply won’t happen.
The reason for this blog is that I know many people who have substantial assets tied up in their company’s options and stock programs. Like they say, a recession is when your neighbor gets laid off - a depression is when you get laid off. I am not sure what they say when your retirement gets wiped out, but it “ain’t” good.
Diversify. Diversify. Diversify.
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The real fiasco is the bailout Bear and Stearns got.
1. JP Morgan got ultra low financing from the NY Fed to purchase the bank
2. JP Morgan quintupled their $2 a share offer..
Speculation is all about risk.
You win, you’re rich. You lose, you’re out.
BSC made a ton of money of mortgage backed securities, is it unfair for them to bite the dust like Miami condo investors?