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Lehman Brothers: Rumor or Reality?


It's a fragile financial world.


We don't "do" rumors in the 'Ville but we'd be remiss if we didn't pass along our ears to ye faithful.

The chatta--and it's just that, unconfirmed chatta--is that counter-parties are "pulling a Bear" on Lehman Brothers (LEH). In other words, the "rumor becomes reality" scenario is making it's way around the trading wires.

I have no insight to the legitimacy of these stories but I'll say the same thing I said about Bear Stearns (BSC) in March. If rumors alone can bring down a franchise, how strong can that franchise be? This speaks to the fragility of a globally interwoven banking system in a finance-based economy built on more than $500 trillion of derivatives.

The conditional elements for meltage are in place--we've been warning about the wobbling wheels since last summer and speaking of the conditional elements for years.

I'm not smart enough to know if the comeuppance has arrived--there are huge agendas and proactive initiatives in play--but I'll humbly note that the recipe for slippage that we've spoke of--BKX 75, a stronger dollar and slippage in commodities--is quietly in place.

To be clear, I don't have a position in Lehman--or any financial, for that matter, despite my incessant and insistent rambling about the importance of BKX 75. The meat of my heat is in the short commodity space, which I'm picking at and trading around as a function of discipline, and I'm trying to stay tight

The purpose of this post is to again point to risk management over reward chasing as the modus operandi of choice. By the time most people learn that lesson, it may be too late.

Be a Minyan. Be proactive. Be careful. And be yourself sir. No matter what happens, they can't take that away from you.



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No positions in stocks mentioned.

Todd Harrison is the founder and Chief Executive Officer of Minyanville. Prior to his current role, Mr. Harrison was President and head trader at a $400 million dollar New York-based hedge fund. Todd welcomes your comments and/or feedback at

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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