Lehman and Enron Shared Same Bankruptcy Trait

Michael Markowski  |


Saturday was the 10th anniversary of Lehman’s September 15, 2008 bankruptcy filing. Below are the anniversary dates for other four of US’s five largest brokers as of January 1, 2008. All five shared a common trait that Enron had prior to its sudden bankruptcy filing. September is also the 11th anniversary of my EQUITIES Magazine “Have Wall Street’s Brokers Been Pigging out?” article in which I told all of my readers to get out of all five.

  • March 16, 2008-Bear Stearns acquired by J.P. Morgan Chase  (JPM).
  • September 14, 2008-Merrill Lynch acquired by Bank of America  (BAC).
  • September 23, 2008-Goldman Sachs  (GS) rescued by Warren Buffet’s $5 billion investment.
  • September 23, 2008-Morgan Stanley  (MS) rescued by Mitsubishi Finance’s $9 billion investment.

Each of the five had been diagnosed as having a common bankruptcy trait that I discovered in 2002. The sudden collapse of Enron in 2001, compelled me to perform an autopsy on the company and its financials. It’s especially since:

  • At 10/18/01, all 15 of Wall Street’s analysts rated Enron a buy and when it filed for bankruptcy there was only one sell rating.
  • Fortune Magazine had named as “America’s Most Innovative Company” for six consecutive (1996-2001) years.

In examining Enron, my hope was to discover what could have predicted and prevented its demise. After discovering the key trait, it was back tested against the financials of more than 100 US companies, which had gone bankrupt over the previous five years. They included Sunbeam, which had also declared bankruptcy under circumstances which were eerily similar to Enron’s. The trait was then programmed into a predictive algorithm, which was named “The EPS Syndrome”. Since 2002, I have utilized the syndrome to predict the bankruptcies of some of the US’ most visible and seemingly healthy public companies. All five of the brokers had multiple diagnoses of the syndrome in the quarters prior to 2008. The video below which is about “The EPS syndrome” includes Lehman.

The charts that that depicted the diagnoses of the “The EPS Syndrome” that I used to make the predictions for the five brokers in my September 2007 article are available under the “Negative Cash Flow Research” category at BullsNBears. See also “About ‘The EPS Syndrome’ and how it was discovered”. The syndrome is currently utilized to identify and recommend short selling opportunities for the shares of publicly held companies. Access to these short recommendations is available under the “Perfect Shorts” product category at BullsNBears.com.

There is a company, which has been diagnosed with the “The EPS Syndrome” that has a market cap which is substantially higher than Enron and Lehman and all of the other previously diagnosed companies. It will be named as soon as subscriptions to Perfect Shorts becomes available.

Subscriptions to Perfect Shorts Research are not yet available. Because of my extensive experience with short selling we will not commence to make short recommendations to subscribers until the stock market’s technical indicators confirm that the new secular bear market is underway. Shorting at the top of a market can be very risky. Additionally, the number of Perfect Shorts Research subscriptions that will be available will be limited because there is a limit to how many shares of a company can be borrowed to short.

Register to receive an alert for when Perfect Shorts subscriptions will be available. Subscriptions will be allocated based on waiting list seniority. Click here to sign up for Perfect Shorts.

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Companies

Symbol Name Price Change % Volume
MS Morgan Stanley 45.11 -1.31 -2.82 11,166,709 Trade
JPM JP Morgan Chase & Co. 106.36 -1.55 -1.44 16,199,139 Trade
GS Goldman Sachs Group Inc. (The) 221.60 -5.36 -2.36 2,736,770 Trade
BAC Bank of America Corporation 27.38 -0.94 -3.32 89,942,875 Trade

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