Here Come the Bankruptcies!

News reports indicates that Frontier Airlines and Linens n Things are filing for Chapter 11 bankruptcy. They join a growing list of companies that can’t pay their debts: firms like Skybus Airlines, Movie Gallery, and First Marblehead Bank’s student loan guarantor.

Bankruptcies make for dramatic news copy. It’s all there: management errors, layoffs, worried bankers, and courtroom drama. But they rarely forecast anything but last year’s economy. As an example, filings spiked in March of 2001, well after the tech bubble had begun to burst. They continued to head higher for the next two years, until they peaked in March of 2004, well after the recovery was underway.

Bankruptcies are a lagging indicator. Using them to manage money is like heading down the highway with your eyes firmly glued to the rear-view mirror.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-03T18:07:39+00:00 April 14th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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