Tuesday, May 10, 2005

Dept. of Unknowable Unknows

In finance, as in life, totally unexpected (and mostly unwelcome) events rudely impose themselves on our peaceful life for no good reason. As Donald Rumsfeld memorably stated, they’re the unknown unknowns. It doesn’t matter if you’re very smart, alert, careful and cautious; every once in a while they’ll whack you.

That’s exactly what must be going through the minds of Deutsche Bank’s shareholders today, as this report explains:

LONDON (MarketWatch) -- Deutsche Bank tumbled 2.9% in Frankfurt amid unsubstantiated talk the bank is the prime broker of a hedge fund that's under duress. A London-based spokeswoman wasn't immediately available to comment.

Hopefully, this rumor will prove to be unfounded. But one day, probably in the not so distant future, another Long Term Capital-like accident will once again threaten to bring down many famous names (incidentally, read what LTC’s wonder boys are up to currently).