Sep

16

SardinesThe sardine run off the coast of South Africa is a hotly anticipated event by numerous legions of predators from the shark all the way down to the sea bird. As a defense mechanism, the sardines form large groups that swim rapidly in unison in large forms that are a never ending symphony of sizes and shapes to confuse predators.  Much like the flocking action of birds, this makes them look larger to prey and to confuse the prey with movement while protecting some of the core. The action by banks today resembles some of the sardine defense mechanisms. I wonder to what extent this may work, what other forms may be needed, and what pieces along the way will be stripped off by predators.

Drew Ferraro writes:

Market predators behave a bit differently than carnivorous predators found in the wild. Predators in the wild like an easy meal by pouncing upon the weak, the young and defenseless, and the old, unable to maintain a protective position in the herd. Market predators tear out the sound working organs, leaving the dying corpse for others to digest. This is evidenced by the current financial news. Barclays gets Lehman's North American banking and capital markets units for a Wall Street song.

NEW YORK (AP) — Lehman Brothers, which a year ago had a market capitalization of more than $33 billion, is now unloading its once-prized businesses for what passes as pocket change on Wall Street. Barclays PLC, the third-largest British bank, took advantage of Lehman Brothers Holdings Inc.'s bankruptcy reorganization Tuesday to reach a deal for Lehman's North American investment banking and trading operations for just $250 million.


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  1. Daniel Sanders on September 17, 2008 3:13 pm

    Yes, Lehman Bros. goes for chump change. It's worth a minute to consider predators from the other direction that of the eaten. Unlike small fry, investors, small or large, have got to assess risk. It frequently surpriseS me at how little thought we give to obvious risks like, for example, the guy who keeps monitor lizzards as house pets, or driving without insurance. Risk is everything in investing. I looked at the prices quoted for these storied wall street houses today, and my conclusion is the same as that I was compelled to make when I gave up a good part of my butt during the last big downdraft: The bear eats the turkey.

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