The Price of Success

Bank failures get announced every week. What does this mean?

For most depositors, it means nothing. The bank closes on a Friday afternoon, and after some new signs go up, it’s open with a new name on Monday. The FDIC shoulders any losses. Of course, if your Social Security number is associated with more than $250 thousand, you’ll take some losses. But why?

Usually it’s because the bank made a bet that went wrong. It could be a series of commercial deals, or it could be some securities they bought that went sour. When too many things go too wrong, the leverage that transforms a mediocre profit into a good investment reverses and turns an ordinary loss into a wealth-destroying disaster.

That’s what scores of investors around the country are finding out. Some fortunes have been wiped out, the trailing wreckage of the housing meltdown. This is the price some pay for the freedom to pursue their dreams. But without that entrepreneurial spirit, our society wouldn’t be so dynamic.

Douglas R. Tengdin, CFA
Chief Investment Officer
Hit reply if you have any questions—I read them all!

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By | 2014-09-04T18:59:19+00:00 July 8th, 2009|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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