What I Learned from Losing $200 Million - Issue 31: Stress
▻http://nautil.us/issue/31/stress/what-i-learned-from-losing-200-million
I’d lost almost $200 million in October. November wasn’t looking any better. It was 2008, after the Lehman Brothers bankruptcy. myself recently, on the bank’s website. My first reaction was that it seemed almost farcically fashioned to “fight the last war”: The Dow drops by about half, U.S. GDP dips around 5 percent, unemployment spikes to 10 percent—basically it’s the aftermath of 2008 all over again. It doesn’t account for other potential calamities, like a breakup of the Euro, for example, or an emerging market crisis, or hyperinflation, or shock-induced feedback effects like the ones I faced with fuel. There’s also the inconvenient fact that both Fannie Mae and Freddie Mac were stress tested regularly by their regulator, and declared well capitalized—right up until they failed in 2008. (...)