Talking Tough

The great boxer Joe Louis once quipped, “If you have to say you’re tough, you aren’t.” In financial markets these days, toughness is measured by liquidity and capital. To paraphrase Joe Louis, if you have to say how much you have, you haven’t got enough.

I was thinking about this while reviewing the current financial crisis. It seems that all the banks that have talked about how much cash they have at the holding company or how well capitalized they are have all gone down.

Think about it: Fannie Mae, Countrywide, Bear Stearns–they all protested about how much cash and capital they had, and were all taken out for a song.

So the next time you hear some executive squawk about how strong his company is, think of Joe Louis. If he were that strong, he wouldn’t have to say it.


Douglas R. Tengdin, CFA
Chief Investment Officer
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