Brilliant investment technique, concentrate all your holdings in a company you run, then add to risk via margin.
While I use margin, I have a bit of diversification.
Lesson - managers egos can drive them to severe errors in thinking.
Margin Calls Prompt Sales, and Drive Shares Even Lower - NYTimes.com:
"“That suggests that there may be other cases where chief executives who are controlling shareholders or the company’s major shareholder with the same problem,” Mr. Vogel said. “These people present themselves as financially savvy and not subject to great risk associated with debt. But in fact it seems that that is not always the case.”"
Such as :
On Friday, Aubrey K. McClendon, the chief executive of Chesapeake Energy, issued a statement saying he had been forced to sell all of his 33.5 million shares in Chesapeake because of a margin call. And Sumner M. Redstone, the chairman of Viacom and CBS, disclosed that he would sell $400 million in shares in those companies to pay down a loan.
No comments:
Post a Comment