Market volatility indicates a drop of such magnitude could happen at any time. Risk of being such a drop always oscillates and it is an inevitable feature of stock. Lehman Brothers investment bank one the most painful crisis experienced by investors in the past decade of the financial industry. Lehman, the 4th largest US investment bank at the time of the collapse. The bank was deeply involved in mortgage origination that it had effectively become a real estate hedge fund disguised as an investment bank.
Here are some lessons to learn from Lehmann Brothers crisis and one should learn from its past experiences so as history should not repeat itself further in this case:
1. Risks: Despite being a successful investor, all who invested in 2008 lost their life saving as they invested in high-risk investment instrument while they are close to retirement. Investelite Research guides you on the risk assessment and stop-loss policy to follow. Commensurate risks are preferable.
2. Reckless Investing: Always be cautious while investing in risky instruments. Before 2 or 3 years financial crisis, Lehmann Brothers stocks were consistently growing people think it is only the leading company but soon it suffered a huge loss in 2008 and filed in a bankruptcy. For example: If the selling of stock ratio is greater than purchasing of stock for a company than automatically share prices dropped.
3. Performance: For many years Lehman Brothers ruled over the market but ultimately 10 years before in 2008. It was filed for the bankruptcy with $639 billion in assets and $619 billion in debt. So, never get overconfident with an amazing performance of a particular company. Measure the performance by accompanying chart. You can take technical experts help from our advisory firm who have the tactics to visualize the charts, moving averages and gives you appropriate data information.
4. Crash to correction: Try to understand the historic scenarios so as not to repeat the mistakes again. Reduce your equity exposure to whatever your tolerance level is. Though Lehman Brothers bailed out there are too much learn from the downfall and we learn from the crash and correct our strategy of implementation in the right direction.
5. All eggs in one Basket: Never invest in one sector or company, even if company returns are high. Sometimes best-performing stocks company may collapse badly and not recovered yet. Even Nifty and Sensex companies also fluctuate. In this case, investors lost a lot. Better we suggest to diversified your portfolios to make sure you won’t suffer from a huge loss.
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