Investors may not be that impressed by Lehman CFO Erin Callan's forthrightness. The Wall Street Journal (among others) reported today that Lehman Brothers Holding is taking a $2.8 billion loss for the second quarter—a worse-than-expected report. (Its shares tumbled by 8 percent yesterday and, at one p.m. today, were down another 6 percent.)
According to the Journal, things may not be so bad for Lehman: The financial firm reportedly holds $45 billion in liquidity and has already sold "$30 million of mortgage assets to hundreds of investors." Callan said yesterday that Lehman didn’t need all that capital—that it was to be used to take advantage of “future market opportunities.”
That may be but, as the Financial Times’ Lex Column notes, the de-leveraging and the new $6 billion in capital may calm some nerves, but Lehman’s earnings power going forward is diminished.
The unprecedented seems to happen all too frequently in financial markets. Is there something wrong with the way financial advisors build their clients' portfolios? "Post" Modern Portfolio Theory says yes, and it's gaining currency...
• Create value from dormant assets such as appreciated stock and real estate,
• Guarantee lifetime income for the donor and beneficiaries,
• Retain assets that might otherwise be liquidated due to tax and estate-planning decisions, and
• Build a charitable legacy...
