History Can Tell Us Something

Done! My book on E.F. Hutton's downfall is history and now on to one on the sale of 134-year old firm Lehman Brothers to Shearson American Express in the 80s. You may know that Hutton was also gobbled up by Shearson (they then had the unwieldy name of Shearson Lehman Hutton). I wonder what happened after that, though, because Lehman Brothers is still around. I think some of the old partners rallied together and put together an MBO (Management Buy-Out, like an LBO but not by outsiders) at some point. Interesting.

Looks like Lehman blew up under similar circumstances to Hutton: management hubris. Should be another good read.

Had a meeting this morning with a supplier who has hedge fund and structured note products. It's interesting to hear the difference between what is said to 'laymen' in the business here and how the products are actually structured. One thing I appreciate from my time in Korea is getting to know the products so well (after deconstructing them and getting guys to spill the beans about how they actually work) that I can spot the problems with the stuff they sell here in Canada. Now I can ask the right questions, the downside is not many are able to answer them because only one or two people in the firm offering them may know how they operate--the rest are marketing and admin people who never looked that far into them.

I guess the comment from today's blog is it's good to know what happens behind the scenes so you can anticipate problems...nothing like learning from others' mistakes.