Lehman Minibonds

After the bankkruptcy of lehman brothers a week ago, the financial sector has gone into hell. Even AIG is at the verge of collapse. The horrible thing is lehman brothers has been selling out the toxic CDO as minibonds in HK till Aug 2008 and the victims, some even retiree, lost billions.

I must be lucky because I have been buying these "minibonds" for attractive bonus since 2003. Actually I bought the last batch in 2006, and I sold them out in Jan 2008.

Why do I sold it out in Jan 2008? It is because the Lehman brothers were still selling out the minibonds in Jan 08 with big ads everywhere. I read the small print of the ads " the CDO involved are not subprimed related etc" this is really 此地無銀，so I digged out the information booklet and read carefully and found out the word CDO everywhere, with my limited knowledge I know CDO is something bad, so I sold out all my minibonds in Jan 08 with net profit.

Actually I have bought US mortgage-back securities (MBS) too back in 2003. And I sold it out in 2004 luckily again. At the time it was promoted as something very secure with high interest rate, and the track record was a straight upside for > 10 years. Then I noticed a drop at the end of 2003 by 4%. The issuers immediately reassured that the refinancing activities caused the transient hiccup and it would pick up its uptrend soon. I went to the bookstore and searched through these MBS. After reading the whole paragraph, I had no idea of what it was talking about. But only the last sentence caught my eyes " during market downturn, it will fall quickder than bonds etc". So I sold the MBS out next day and made a 4% lost.

I also bought a lot of ELI and ELN (most issued by these big names of investment bank) in the past few years and have made fairly good profit. But I ceased to buy the structural products since 2008 because I think the stocks are becoming cheap and I should save the bullets for cheap stock.

Alas, so I escape from this structural product crises luckily. I put this down as a lesson for myself because I worry that I might not be that lucky again next time.