Greed may be good, but it's dangerous

The Los Angeles Times, like every other paper on the planet, has the story of the demise of several Wall Street firms:

With Wall Street already reeling from the demise of one storied investment firm and the rushed takeover of another, investors are bracing for more turbulence as the housing crisis continues to hammer the nation's financial system.
The Dow Jones industrial average plummeted 504 points on Monday, the largest one-day loss since the aftermath of the 11 September 2001 attacks, after investment bank Lehman Bros. became the biggest company to file for bankruptcy protection and Bank of America announced it was acquiring Merrill Lynch.The market's direction today could hinge in large part on what happens with insurer American International Group Inc. -- the latest financial titan struggling to stay afloat -- and on the outcome of a Federal Reserve meeting on interest rates.
Like Lehman and Merrill, AIG has recorded large losses on mortgage-related debt. Its stock price plummeted 61% on Monday as the company scrambled to borrow as much as $75 billion to tide it over.
And, as with Lehman, investors fear that a collapse of AIG would ricochet through the financial system and prompt another wave of selling in the stock market.
The depth of the crisis had analysts making comparisons to the aftermath of 9/11, the dot-com bust and the 1987 market crash, if they were making comparisons at all.
The Dow ended the day down 504.48 points, or 4.4%, at 10,917.51. It was the worst one-session point drop since the blue-chip index plunged 685 points, or 7.1%, on 17 September 2001, the day markets reopened after the terrorist attacks. It was the biggest one-day percentage decline since a 6.4% plunge in July of 2002. Stock prices also tumbled in Asia and Europe, and were down again in Asia early today.
The downfall of 158-year-old Lehman, combined with the unexpected deal by Bank of America to acquire Merrill, marked the most dramatic reshaping of the Wall Street landscape since the Great Depression, analysts said. Lehman, mortally wounded by loss-ridden securities tied to real estate loans, filed Monday for protection from creditors who hold more than $600 billion of the firm's various IOUs.
In its bankruptcy petition, Lehman reported assets of $639 billion and liabilities of $613 billion. It listed 30 unsecured creditors to whom it owes about $158 billion. The markets are likely to remain on edge for weeks, experts said, until the extent of Lehman-related losses at other firms becomes clear.
After Monday's loss, the Dow was down 23% from its all-time high of 14,164.54 reached last October -- well into what is generally considered bear market territory.
Many financial advisors are urging clients to resist the urge to panic and avoid selling at what could be the bottom of the market. But investors are clearly nervous. That was evident in the huge appetite for Treasury bonds Monday, which drove yields on the securities sharply lower.
The yield on the ten-year Treasury note plunged to 3.39%, down from 3.72% on Friday and the lowest since March. If the decline holds, it could help pull mortgage rates lower, giving an assist to the housing market. But yields on corporate bonds rose, making it more expensive for companies to borrow.

Rico says that, fortunately, with only one share of Apple to worry about (and that down only a little, tech stocks being countercyclical, in spite of the huge drop in the Dow), the rest of the market can take care of itself, the greedy pigs...