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On Friday, 14 March 2008, Bear Stearns was worth $30 a share or thereabouts. On Monday the 16th, it was worth $2 a share (Lewis, Panic, 341-342). No one had a clue.
Why (Lewis, Panic, 343-344)?
In good times, financial firms make too much money. In bad times, financial firms aren't worth anything.
The fact seems to be that in good times CEOs of firms like Bear have to ignore the fact that their most profitable products are very risky, because in bad time their firms hemorrhage money.
The average of the two, boom or bust, defines the market.
Something is about to give.
Lewis pointed out problems in March 2008 that, basically, still haven't been resolved. His analysis points to a problem CEO's in the industry have: Their best assets go down the elevator each evening. If they want to retain control of those folks, they have to let them do what they want, a formula that may lead to the boom/bust cycle. His point? If you regulate, it is in this environment that you have to start.
Reference
Lewis, Michael. Panic. The Story of Modern Financial Insanity. W. W. Norton & Company. 2009.
Lewis, Michael. What Wall Street's CEOs Don't Know Can Kill You. Bloomberg News. 26 March 2008. Also in Michael Lewis Panic.