Bear Stearns is no more today, it was sold for $2 a share to JP Morgan, at 33% of its price in 1985. I had my first job at Bear Stearns, and there I started learning of the intricacies of the capital markets. More than 10 years have gone by, and I have come and gone through five other jobs, gone back to school, seen bubbles come and go... but seeing Bear go down makes me put a lot of things into perspective.
First, careers, just like investment returns, needs to be seen/measured/understood not in days or years, but, decades. It is almost surreal to see that the work of 85 years (at BSC) could be taken down in a matter of days (although it was really the work, bad decisions of the last three years - or the foray, or the manner in which they embraced the opportunities in the mortgage industry).
The Fed is scrambling now in what I think is the most important questioning of the world of fiat money created in the early 70's. Credit expanded like it never did before these last few years, and with credit, the economy also went along, and with it asset prices. The problem is that asset values need to be supported by real incomes, real earnings, and if these are based on credit, which ultimately also has a limit, then we have a problem.
In the simplest way of explaining what I mean - more money was lent than there is and people that lent it are asking for it back... there is simply no equity that can support the real value if all the credit is called back.
Human self-interest and greed can take down in one day what responsible behavior builds in over 100 years.
The saddest part for me will be what "Bear Stearns" will represent to my kid when in 20 years he asks me about my first job decision... it will mean either nothing to him (probably) or have a negative connotation....
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