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Tuesday, July 1, 2008

Lehman: Death Spiral?

Lehman Hits Lowest Level Since 2000 Amid Buzz: “Lehman Brothers Holdings Inc. shares tumbled on Monday to their lowest level since 2000 on yet another swirl of speculation that the Wall Street firm is in trouble, including possibly having to sell itself for a bargain-basement price.

Rumors of a ‘take under’ sent Lehman (LEH) spiraling down 10% in late afternoon trade yesterday.

“It didn't help Lehman that Monday was the last day of the quarter, when fund managers typically dump their losing stocks so they don't have to disclose those egg-on-your-face positions to investors. Stocks sold for that reason often get a bounce at the start of the next quarter.”

While that may be the case, I’d argue that is far more likely that investors are just now getting really uncomfortable with the LEH’s balance sheet.

Lehman swears it doesn’t need any more funds. Banks, Lehman: Busy Lying and Raising Funds

Lehman also swears it’s been shrinking it’s balance sheet and reducing leverage. Much like Goldman Sachs, nothing but lies: Think About: Goldman Sachs Level 3

In reality, Lehman is stuck with a huge amount of toxic garbage on it’s balance sheet. To avoid the consequences, Lehman has been playing account games, moving these assets into first the Level 2 and then the Level 3 asset buckets: Bulltrap: ABCP and Level 3 Asset Bombs

Investors have caught on Lehman is now unlikely to survive. Investors have placed their bets accordingly: Lehman Put Open Interest: Just Like Bear Stearns

All support has now been broken with a close below $20. LEH is now in free fall. Customers and clients are probably getting really nervous about now… once the first few pull their funds the flood gates will open and LEH will cease to exist.

19 comments:

Anonymous said...

Jim Cramer is psycho! Send help!

http://youtube.com/watch?v=_nkZ3eHeXlc

Anonymous said...

Jim Cramer is RICH! YOU get help!

Ben Bittrolff said...

I hate Jim Cramer...
But taking money from the fools that watch him puts a smile on my face ever single time.

Cramer even said there would be a housing SHORTAGE soon...

You could probably put an angry, rabid donkey, kicking and screaming, in front of the TV and it would look and sound exactly like Jim Cramer on a good day.

Anonymous said...

I need help??
Well, actually, I do.
Im so busy with my day job that I couldn't possibly keep up with all the market gyrations. So what I do is find guys Like Michael J. Panzner, Mike Shedlock, Don Harrold, and of course, Ben Bitroff, ( and too many others to mention) that speak in ways that resonate with my own thinking. They have done all the well educated research that Ive come to rely on. I then digest all that stuff to come to my own decision and I think Ive been quite successful.
Now I can guarantee you that if I were following Cramer instead, I would've certainly have 'Done my Ass' long ago.

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