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A Summary of Financial Markets in 2008

A Summary of Financial Markets in 2008

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A Summary of Financial Markets in 2008

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  1. A Summary of Financial Markets in 2008 Professor Ludwig Chincarini Session 1 January 21, 2009

  2. II. Introduction 2008 Recap

  3. II. Introduction A. The Markets Question: What happened to the US economy in 2008?

  4. Introduction A. Economy

  5. Introduction A. Economy

  6. Introduction A. Economy

  7. Introduction A. Economy

  8. Introduction A. Economy

  9. Introduction A. Economy

  10. II. Introduction The Markets Question: What happened to our favorite markets last year? Were U.S. equities the best place to invest? What about hedge funds? Which hedge fund strategies did the best?

  11. Introduction

  12. Introduction

  13. Introduction Best and Worst Industry Groups

  14. Introduction Best and Worst Industry Groups

  15. Introduction Ponzi Scheme are back in vogue thanks to Mr. Madoff

  16. Introduction Bear Stearns and Lehman Brothers Disappear Freddie and Fannie go to Govt.

  17. Introduction Giants beat the Cheaters…

  18. Introduction US Market was bad…what about rest of world?

  19. Introduction Latin America

  20. Introduction What about the Europeans?

  21. Introduction Und so?

  22. Introduction And Asia?

  23. Introduction Asia?

  24. Introduction And the real sad stories…

  25. This Slide from MBA Class – January 2007. The signs were there. Bonds are nice too. Corporate Spreads are tightening but yield curve inverted…a puzzle? A crash to come?

  26. Introduction Treasury Yields are low…will inflation come soon? What do we do? Short Treasuries? Long High Yield?

  27. Introduction Treasury Returns…

  28. Introduction Treasury Returns…

  29. Introduction Borrowing and Lending dry up…

  30. Introduction Commodities – another shed investment in 2008

  31. Introduction Commodities – another shed investment in 2008

  32. Introduction AIG was safe right?

  33. Introduction No one knows what to do.

  34. Introduction Question: How did hedge funds do in 2008? Which ones?

  35. Introduction

  36. Introduction M&A and Hedge Fund Happiness

  37. Introduction M&A and Hedge Fund Happiness

  38. Introduction M&A and Hedge Fund Happiness

  39. Introduction IPOs

  40. Introduction IPOs: The Best

  41. Introduction What about stock picking? Question: Does anyone have any great stories to tell? Any sad stories to tell?

  42. Introduction • The Worst of 2005…a story of the MBA Class of 2006… • 16 cents to $6.00

  43. Introduction • The Best of 2008

  44. Introduction • The Worst of 2008

  45. Best Short Lehman Brothers Long Goldman Long S&P 500 Short S&P 500 Long Morgan Stanley Heavily Long US Treasuries Short Consumer Staples Long Banks Long Oil (CHK & WFT) Short Airlines (Short AMR, Long LUV) Short BBY Short BAC (after MER purchase) Long VISA IPO Worst Long Lehman Brothers Short Goldman Long YHOO Short Banks Long Asia (not a trade, but part of asset allocation) Long USA (not a trade, but part of asset allocation) • Introduction • Some of my Best and Worst and lots of missed ideas…

  46. Introduction Can we build portfolios and find stocks that will beat the S&P 500? That will have a positive return? That will beat the risk-free rate? Sources: Wall St. Journal, CS-Tremont, The Economist, and own calculations.