“Celebration” is not the word that comes to mind as market players observe the fifth-year anniversary of the Lehman Brothers crash.
Rather, what now inspires investors to remember the crash is the cautionary tale it offers of the terrible things that can happen when the financial world spins out of control. Indeed, “caution” is a better word to describe why anybody should mark the date of Sept. 15, 2008, when Lehman filed for bankruptcy, according to Jon Sundt, president and chief executive of alternative investment firm Altegris.
“I think 2008 crystallized this idea that you need to be diversified,” Sundt (left) said in a recent interview with ThinkAdvisor. “The people who didn’t have diversified portfolios to this day are still suffering. It’s a stark reminder that you had better build a portfolio that can survive bad unforeseen outcomes.”
Sundt remembered that he was sitting at his desk in Altegris’ headquarters in La Jolla, Calif., the day that Lehman crashed.
“It was a bit of ‘shock and awe,” he recalled. “We had dozens of managers that we allocate to and thousands and thousands of investors. My biggest concern at the time was: Do we have any counterparty risk? We quickly determined that we had no direct exposure to Lehman. Some of our managers didn’t do so well, but those in the managed futures space did well, and so did people with hedges.”
Sundt’s own firm has gone through transmutations since the Lehman crash. After he founded Altegris in 2002, Genworth Financial bought his firm in 2010 for approximately $35 million, and earlier this year Genworth sold its wealth management unit, including Altegris, for $412.5 million to a partnership of two private equity firms, Genstar Capital and Aquiline Capital. Altegris currently has more than $4 billion in assets under management and employs 120 individuals.