Risk is the price of reward, the only problem is some of us overpay!

For those that have been following my posts on the investment banks, these companies have been quite profitable for my proprietary account. To date:

• Banks, Brokers, & Bullsh1+ part 1
• Banks, Brokers, & Bullsh1+ part 2
• Jeffries Group observations
• Bear Fight - A most bearish view on Bear Stearns in a bear market
• Is this the Breaking of the Bear?
• Bear Stearn’s Bear Market - revisited
• Is Lehman really a lemming in disguise?
• The Riskiest Bank on the Street
• Goldman Sachs Snapshot: Risk vs. Reward vs. Reputations on the Street

Morgan Stanley Lost Money Trading 16 Days in Second Quarter, Filing Shows

July 9 (Bloomberg) — Morgan Stanley, the second-biggest U.S. securities firm by market value, lost money on 16 trading days during the second quarter, twice as many as in the prior period, as the firm made wrong-way bets on energy and stocks.

The firm also earned $125 million or more on 10 trading days during the period, one day less than in the first quarter, according to a filing with the U.S. Securities and Exchange Commission today. Goldman Sachs Group Inc., the largest U.S. securities firm, said this week that it lost money on 20 days in the second quarter, up from 17 days in the first quarter.

… During the second quarter, Morgan Stanley reclassified to Level 3 from Level 2 about $7.2 billion of corporate and other debt, including commercial mortgage loans and commercial mortgage-backed securities, because of a decline in trading and available market prices. At the same time, about $5.8 billion was reclassified to Level 2 from Level 3 as trading resumed for certain corporate loans and loan commitments.

Goldman Sachs this week said Level 3 assets fell to 7 percent of the total from 8.1 percent in the first quarter.

Morgan Stanley’s so-called Tier 1 ratio, which bank regulators monitor to gauge a lender’s ability to withstand loan losses, was 12.4 percent in the second quarter. That compares with 10.8 percent at Goldman.

Posted in Investment Banks |