Comments on: The risk-averse rich http://blogs.reuters.com/felix-salmon/2009/12/15/the-risk-averse-rich/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: MrBill http://blogs.reuters.com/felix-salmon/2009/12/15/the-risk-averse-rich/comment-page-1/#comment-10092 Wed, 16 Dec 2009 09:07:03 +0000 http://blogs.reuters.com/felix-salmon/2009/12/15/the-risk-averse-rich/#comment-10092 Then again one has to consider the ‘absolute’ sophistication on the investor and the ‘understanding’ of risk.

Russian Oligarchs – and mini-Oligarchs – who leveraged their assets with borrowed money to invest in yet more risky assets, that were highly correlated with their underlying loan collateral, did well while markets were rising, but got punished hard during the 75-percent decline. Both in terms of margin calls, and being forceably closed-out of those leveraged bets as the price of the underlying collateral declined relative to the value of the debt they needed to repay, and losses in the value of their underlying assets.

They got killed by leverage because they misunderstood the risk they were taking and how soon market sentiment in a real crisis could turn against them. Billionaires became millionaires. Some millionaires lost ‘almost’ all their ‘financial’ assets.

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By: HBC http://blogs.reuters.com/felix-salmon/2009/12/15/the-risk-averse-rich/comment-page-1/#comment-10085 Wed, 16 Dec 2009 01:45:00 +0000 http://blogs.reuters.com/felix-salmon/2009/12/15/the-risk-averse-rich/#comment-10085 I think we already saw this risky schism of privilege between Rich People and Little People sufficiently illustrated at Enron and General Motors.

What amazes me is that some of the so-called “risk-averse” guys in $10,000 suits have yet to go to prison, while the people that worked for them literally get to starve on account of chronic 401k evaporation.

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By: Mega http://blogs.reuters.com/felix-salmon/2009/12/15/the-risk-averse-rich/comment-page-1/#comment-10076 Tue, 15 Dec 2009 21:20:59 +0000 http://blogs.reuters.com/felix-salmon/2009/12/15/the-risk-averse-rich/#comment-10076 How many institutional managers have a bit of their portfolios in high-risk investments? I wouldn’t consider a union pension fund to be a “rich investor.”

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By: Dollared http://blogs.reuters.com/felix-salmon/2009/12/15/the-risk-averse-rich/comment-page-1/#comment-10074 Tue, 15 Dec 2009 20:03:01 +0000 http://blogs.reuters.com/felix-salmon/2009/12/15/the-risk-averse-rich/#comment-10074 Felix, that’s very naive. What happens to those funds if something bad happens to the company? They either 1) are committed to an annuity purchased from a large, stable insurer just before the chapter 11 filing, or 2) they go into a retention bonus pool that the company commits to pay to those “irreplaceable members of the leadership team” as part of the re-organization.

Google it. You’ll see these things in every Chapter 11 in the last 20 years.

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