Sunday, September 28, 2008

Financial crisis quote of the day

“It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of those transactions.”
That was Joseph J. Cassano, head of the AIG Financial Products office in London, England, speaking in August of 2007.

During the following year his 377-person office produced $25 billion of losses that sank the otherwise healthy business of the world's largest insurance company with 116,000 employees.

The story.

The moral: There's no escaping the risk-reward relationship on investment returns. If you are reaping profits hand-over-fist like "minting money", you are taking one heck of a risk somewhere. If you aren't smart enough to see where it is, at least be smart enough to find someone who is that smart to explain it to you.

The same thing goes when you have somebody else investing your money for you.