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Financial question...Morgan Stanley....should I be scared?

A few years ago when my mom passed away I inherited a fair amount of money. My mom had it invested with Morgan Stanley and I decided when I inherited it that I would keep it with them. All legal paperwork was processed and it's all in my name now. After yesterdays debacle on Wall street and the financial crisis of the past year or so how nervous should I be with my money with Morgan Stanley? My portfolio is moderate in risk and spread over a fairly broad investment scheme but that won't do much if they go belly up I think they are posting this quarters numbers tomorrow and I believe they are posting a profit but greatly reduced from initial estimates. So what to do...........if anything?
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Old 09-16-2008, 01:45 PM
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Pick up the phone.

Turn in that 2000lb one you've got for a new, lighter, easier to use one.
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Old 09-16-2008, 02:05 PM
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Quote:
Originally Posted by MichiganMat View Post
Pick up the phone.

Turn in that 2000lb one you've got for a new, lighter, easier to use one.
Not sure what you mean? If you're saying call Morgan Stanley aren't they going to say we're O.K. and you'll weather the storm fine? I doubt Lehman Brothers folks were telling their customers " pull your money out " do you? Maybe I'm being too cynical?
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Old 09-16-2008, 02:10 PM
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Hrm, you make a good point...
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Old 09-16-2008, 02:11 PM
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Quote:
Originally Posted by MichiganMat View Post
Pick up the phone.

Turn in that 2000lb one you've got for a new, lighter, easier to use one.
Huh??
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Old 09-16-2008, 02:15 PM
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Huh??
mean "call them"
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Old 09-16-2008, 02:16 PM
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Morgan Stanley is a solid company. I ask if they are managing a portfolio of assorted investments or is your Mom's money invested in their stock, or is it a MS managed money market fund, or one of the MS fund family? It makes a difference. If the money is in other's funds or stocks it is different from being in the house.
Old 09-16-2008, 02:18 PM
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If I read your post correctly, you've got an brokerage account with Morgan Stanley for the assets (stocks/bonds/etc.) which you inherited when your mom passed away.

Customer accounts (and their assets) are safe - the brokerage firm manages them for you (for which you pay them a fee), but does not own them - you do.

I'm assuming from your description of a "broad investment scheme" that the porfolio has different types of investments, which is good. It goes almost without saying, though I will say it, that valuing investments is tricky, all the more difficult in these challenging times.
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Old 09-16-2008, 02:30 PM
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Quote:
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If I read your post correctly, you've got an brokerage account with Morgan Stanley for the assets (stocks/bonds/etc.) which you inherited when your mom passed away.

Customer accounts (and their assets) are safe - the brokerage firm manages them for you (for which you pay them a fee), but does not own them - you do.

I'm assuming from your description of a "broad investment scheme" that the porfolio has different types of investments, which is good. It goes almost without saying, though I will say it, that valuing investments is tricky, all the more difficult in these challenging times.
Steve you are right on with your assumptions it is a managed account. I probably should have been clearer in my original post. And I am going to call them to follow up. After my original post I did a financial search and I see Morgan Stanley posted their earnings today ( a day early ) and they turned a profit although less than last year but better then " financial experts " had estimated. I guess short term I'm alright but man it's a scary time right now.
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Old 09-16-2008, 03:13 PM
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Old 09-16-2008, 08:19 PM
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Quote:
Originally Posted by rfuerst911sc View Post
After yesterdays debacle on Wall street and the financial crisis of the past year or so how nervous should I be with my money with Morgan Stanley? My portfolio is moderate in risk and spread over a fairly broad investment scheme but that won't do much if they go belly up I think they are posting this quarters numbers tomorrow and I believe they are posting a profit but greatly reduced from initial estimates. So what to do...........if anything?
Be afraid; be very afraid.

We are seeing hundreds of billions of dollars in losses being transferred from private companies to the public (taxpayers) with every bailout.

(Even LEH wasn't a real bankruptcy; the Fed has given $138 billion to Morgan Chase & Co. to settle Lehman trades; without this money, Lehman would have defaulted on its transactions. This is just another government bailout -- a particularly sneaky one in that the government is lying to the public telling the public that they "haven't bailed out LEH.")

For the past few decades there have been too many people who have just "blindly" handed their money over to investment companies (your comments make me suspect you may be in this crowd). Most of the investment companies have mis-managed the money under their control and have effectively lost their clients money. While losing their clients money, they have been lining their own pockets and presenting the image that "Everything is just fine."

Everything is not fine. The government bailouts are just another move to keep the lie alive and hide the true state of affairs from the public.

If you don't know exactly what you own in "investments" and have a rock-solid understanding of the reasons why you own what you own, you should get out of whatever you're in and get into something you understand completely. (Preferably, some type of hard asset, as the current failures are likely to topple our entire fiat money system.)
Old 09-16-2008, 11:18 PM
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It would have costed the "taxpayers" much more than $138bn if the system collapsed.

I really don't understand all these people that cry foul without really knowing what is going on.

The CDS (Credit Default Swap) market is a $62 trillion ($62,000 billion or $62 million millions) mkt. Letting Bear, Freddie and Fannie, Lehman, AIG or any other big institution fail big time will likely unravel the whole system.

You can let this happen. Period.

Is this Moral Hazard? Maybe actually hell yes.

Were mistakes made and too risky positions taken? Yes

Are the authorities (read Fed and Govts) to blame for letting this go out of control? Yes

Have the investments banks, commercial banks, insurer, real estate developers, real estate speculators, mortgage brokers, mortgage borrowers and verybody else acted on greed and for their own benefit? YES

The toy is broken, but right now we cannot afford to throw it away. We need to try and fix it. And for a while a Govt guarantee seems to be working...

The day I worry is when CDS on US Treasuries will start trading in the 100s, the $ gets spanked, and people lose their faith in the US system...

Then we are all in trouble...

You see taxpayers money is a fictional concept when you can just print it, isn't it? The drawback of that is inflation, but with crude down 40% in 3 months and the economy heading straight for a recession I think the authorities are just saying "screw" inflation and lets save the system.

Yesterday the Fed didn't cut the rates (i.e. did not print more money) and talked tough hoping to curtail some of the moral hazard.

It worked for a couple of hours with the stock mkt rallying... we'll see today.

To go back to the original poster question I agree with Competentone. You need to understand where your money is invested. Morgan Stanley's health as an institution as only an indirect effect on the value of your portfolio.

Unless you have given them strict guidelines you'll be down quite a bit, like everybody else.

It's funny but 18 months ago if you were not making 10+% return on your capital you were an idiot. With Fed funds at 2% I used to wonder if people realized the risk they were taking on... you just do not make money from nothing...

Well all these people that were making 10-12-11-14% returns in the last years are wondering now who's fault it is, blaming the CEOs of the big companies and the poor bastards that defaulted on some mortgages because they could not feed their families....

We had it good for too long. This correction was overdue. Let's just hope we do not end up with no capital markets.
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Old 09-17-2008, 01:58 AM
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Matteo,

I just wanted to say thank you for your postings. They are always spot on and very insightful with the markets.

The same should be said of JYL.

Rich
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Old 09-17-2008, 03:23 AM
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Back to the original post. Here is an article on CNBC.com that you might find interesting.

http://www.cnbc.com/id/26736505

This seems to be the most important section for investors to know when it comes to accounts and insurance on those accounts:

If any assets are missing, the corporation [Securities Investor Protection Corporation] will insure an account up to $500,000; of that amount, it can insure up to $100,000 in cash. But the maximum amount covered can be much higher. For instance, if you have a brokerage account, a joint brokerage account with a spouse, an I.R.A. and a 401(k), each account would receive up to $500,000, Mr. Harbeck explained, totaling $2 million in protection.
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Last edited by Rich76_911s; 09-17-2008 at 03:39 AM..
Old 09-17-2008, 03:32 AM
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Quote:
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It would have costed the "taxpayers" much more than $138bn if the system collapsed.

I really don't understand all these people that cry foul without really knowing what is going on.

The CDS (Credit Default Swap) market is a $62 trillion ($62,000 billion or $62 million millions) mkt. Letting Bear, Freddie and Fannie, Lehman, AIG or any other big institution fail big time will likely unravel the whole system.

You [can't] let this happen. Period.
Are you making some sort of "reverse-supply-side economics" argument here?

Are you telling us that the government cannot allow private business to fail if their failure will trigger losses that will reduce the tax revenue streams?

Those who are making your arguments are either the ones who really don't understand "what is going on" or are somehow benefiting from the bailouts.

The simple fact of the matter is that too many people, for decades, have been handing their money to investment companies with the thought that they could make money by "investing" without putting in any effort.

In some cases, when the investment companies are run by honest people, it is true that one can "delegate" the research required to make money investing to others for a percentage of the returns.

But now, large numbers of the investment companies have been mis-managing their clients money. They have effectively lost their customers' money -- or lost large portions of it.

Rather than allowing the losses to become apparent, by allowing these firms to fail, these investment companies have run to the Fed and Treasury for a handout.

Everyone in the country -- whether one had put money at risk or not -- is now paying (through taxes and inflation) for the losses that should be suffered by those who made the failed investments the government has taken onto its books.

These bailouts are nothing more than the transfer of wealth away from "Main Street" to those on "Wall Street."

What we are seeing is a form of socialism for the "rich." (The "rich" in this case are those with money invested in certain markets.)
Old 09-17-2008, 06:33 AM
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I would pull all out and put it into ordinary savings account in some ordinary bank that doesn't gamble too much with derivatives. The quicker the better.

It sucks to be last in line if/when "bank run" takes place.
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Old 09-17-2008, 06:49 AM
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I am being just very practical here.

If AIG goes down it might seize up the capital markets.

Let me make things simple. You have no cash on you, and neither does anyone else. We carry credit/debit cards. Some of us carry cheque books.

These represent our wealth, that is certified by a number in our bank account.

At the banks there no big vault with a zillion dollar bills in it.

If the financial markets sieze up and banks stop lending to each other for fear of the unknown (AIG just went down and nobody knows the exposure of the next bank to AIG, so nobody trusts anybody) you can forget to be able to access your savings.

Why? well possible most of the big banks can end up like LEH (today Morgan Stanley was under fire with the CDS trading 850. As a reference a CDS on LEH was trading at around 600 on Friday).

As Banks fail and go under they bring down their deposit. FDIC guaranteees $100k you say? Well if WaMu goes down the FDIC becomes insolvent unless the govenrment steps in (like in the UK) to at least temporally guarantee the deposits.

I am sure you dfo understand that there is just not enough actual cash in the system for everybody to pull it out at the same time, right?

Intervening to save AIG is like intervening to prevent a run on the banking system by the depositors.

You say taxpayers are going to pay for losses made on investments made by few. This is true, in part.

I am not going into details to explain how the taxpayers benefitted in the past by looser credit conditions and easier access to capital (it seems to me we all have better cars, houses, fridges, tvs and work less etc than our fathers).

But I am saying that the COST of not interveening was far superior to the tax payers than a $138bn bailout.

What you are saying might be right in principle (I actually agree with you) but is not practical.
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Old 09-17-2008, 07:05 AM
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Quote:
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I would pull all out and put it into ordinary savings account in some ordinary bank that doesn't gamble too much with derivatives. The quicker the better.

It sucks to be last in line if/when "bank run" takes place.

How do u pick the bank? How do you know they are not carrying some bad assets themselves and they are just a ticking bomb?

Most of this stuff is OTC and off the balance sheet. There is no way you can figure out how much they have and where they are marking it.

This is the problem. There is potentially NO safe bank out there.
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Old 09-17-2008, 07:08 AM
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But I am saying that the COST of not interveening was far superior to the tax payers than a $138bn bailout.

What you are saying might be right in principle (I actually agree with you) but is not practical.
Consider this "practical":

There are literally millions of market participants (me being one of them) who have tried to position themselves for the "collapse" of the essentially "fiction" the major investment banks have created.

When the government steps in and prevents the collapse a freer market would have allowed, the wealth transfer that would have occurred during the collapse does not happen.

This means that those who either did not understand, or who were involved in the deception, keep control of capital resources a freer market would have re-allocated.

When capital is kept, through an action like government intervention in the marketplace, in the hands of those who mis-manage it, or do not understand it, rather than transferring to the hands of those who would receive it if market forces were allowed to act freely, the net economic result is less growth (and often outright stagnation) than would have been achieved if market forces were allowed to act.

The government bailouts have prevented hundreds of billions of dollars worth of capital from being transferred from the "incompetent" to the competent.

The bailouts reward those with "political connections" who are willing to use the "government's gun" in the marketplace.

Violence has won out over competence in today's markets.
Old 09-17-2008, 07:22 AM
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I don't disagree with your last post. But nobody ever said we were in a free market....

I need to jump here... I have a lot more to say.
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Old 09-17-2008, 07:29 AM
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