How to Say All Their Money is Gone

by Mr Juggles

Dear Valued Client:

As you may know, the investment process has a normal course. Generally accepted investing practices follows that you, the investor, give us, the manager, money. As manager we take that money and buy something with it. This something generates profits and at the end of the year, we pay ourselves some dollar percentage of those assets, as well as some percentage of the generated profits. Everyone profits which is a good thing.

Unfortunately, the money you gave us did not follow this normal course. Per usual, we “invested” your money in tranches of CDOs comprised solely of loans to people who specifically would never be able to pay down their mortgage. Their inability to pay was the very thing that made these such great loans and allowed us to demonstrate to you a profitable two year record of performance. This could have continued but your money decided to disappear.

As far as we can tell, there is no current record that points to existence of your money. It’s no longer part of our assets under management. Look, it’s up to you how you raise your money and I don’t want to get into a nature vs nurture sidebar with you, our valued client. But don’t you think that maybe you should have imbued your money with more of a sense of sticktuitiveness? I mean, it literally seems to have vanished at the worst possible time, what with the depressed prices and attractive yields which now litter our market. This is when we could be printing profits for you (if only your money hadn’t disappeared).

I guess, for us, we’re disappointed in you. Your role is to let us take your money, assume none of the risk and allow us to give you some of the return. Don’t you see how this relationship breaks down if you allow your money to disappear? We’re not angry with you, just disappointed. It’s your loss, as we still earned our management fee, it just seems like a waste for you.

I have enormous confidence in Long or Short Capital management and the ability of our talented professionals to bring you the highest quality products and services now and in the future as they have in the past. You can count on us to deliver…if you don’t let your money vanish.

Mister Juggles

Related: PDF of Bear Stearns Asset Management Letter via Dealbreaker.

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  1. boston
    July 31st, 2007 | 12:45 pm

    Looks like Sowood could use this little letter about now too.

  2. w00t
    July 31st, 2007 | 2:26 pm

    …and while you, the client, sends the money to these money managers, they will recommend a visit to their 39th floor where, upon arriving, investment bankers dressed in thomas pink and armani will hand you a book that will illustrate the synergies of a corn field in Wisconsin and you, leader of investing in all things awesome. somehow it makes sense to you, and you hand over another check to the same money manager you previously visited. luckily, optimization of your cash flow doesnt stop here. The consultants on the 45th floor will recommend a reorganization of your assets and expenditures. after having a few brief interviews with lucky, your dog, it was deemed appropriate that he be “let go”. Now, with fewer occupants, the consultants suggest selling your home, which will allow you to net a large one-time gain and putting it towards growing your investment portfolio.

  3. Sean
    August 1st, 2007 | 12:46 am
  4. richard roma
    August 1st, 2007 | 7:39 am

    Mr Juggles,

    Please level with us. Is the $3.65 dividend
    at risk here by LS/C’s investment into sub-par
    debt instruments?

  5. August 1st, 2007 | 9:14 am

    We came across that long after we decided to deal with that amazing Bear Stearns letter (we linked to that series in the previous comments). It left us conflicted, mainly because McSweeneys is the best thing on the web (Excluding producers of abstract financial advisory services), but then it was a screw it situation, and it we screwed amazingly.

    We will have more amazing pieces on BSAM.

  6. August 1st, 2007 | 9:18 am

    Re: Dividends, we can’t comment on that. We are in a dark period vis-a-vis communicating our financial condition until earning are announced. I definitely couldn’t say that our results are incredible and I would never say that in no way could your dividends be at risk due to sub-prime mortgage exposure. In no way, could I say things like that. Even if they are true. Which they are. But I couldn’t say that due to SEC regulations so I’m going to.

  7. wrong
    August 7th, 2007 | 7:17 pm


    BSAM uses the 13th floor conference rooms with the curved stairways to the executive dining room. That’s if they haven’t moved their offices yet.

    Yes, BSAM has grown so much that they don’t fit in the Bear building.