Portfolio management: lessons learned from Lehman collapse

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I have NOT added any new money to my brokrage account since Sept 15 2008 Lehman Brothers collapse, so it’s easier to calculate the performance of my portfolio (+25%, from Sept 30 2009 to today Sept 14 2009), and compare to benchmark (S&P -16.75%, from Sept 15 2008 to Sept 14 2009). We can not predict catastropic events, if we really want to predict future or talk about any lessons for industry, I think one thing is clear:

one either becomes too big to fail (like AIG), or becomes the first to fail (like Bear Stearns), the last thing one wants to be is being No. 4 investment bank, leverage heavily and caught in the financial and political turmoil. We all know the day before Lehman fall, Merril Lynch (No. 3 investment bank) got bought by B of A, and shortly after that No. 1 Goldman and No. 2 Morgan Stanely converted into bank holding company.

For me personally, I can think of the following.

China video

Huntsman named new US ambassador to China

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I knew about Huntsman (the company) because of last year’s private equity back out from announced acquisition. And I knew Jon Huntsman Sr. found Huntsman Cancer Institute, besides founding the Huntsman chemical company. I didn’t know Jon Huntsman Jr. is a moderate (pragmatic) republican, and he and his wife has adopted a baby girl from China.

A good sign for China and US relationship.

Video from AP (via YouTube)