bankruptcy

When things get really bad, escaping to the Grand Canyon is not enough. You need cash, passports, food, and all the right investments. Kim Iskyan explores Plan Z.

Just a few years before Michael Lewis was at Salomon Brothers, eventually writing his best-seller Liar’s Poker, Porter & Co. Distressed Investing analyst Marty Fridson was in another part of the building at One New York Plaza, identifying profitable trade opportunities in the debt market. He shares details in today’s Journal.

One-third of the reserves of our biggest banks are deeply underwater today. As Porter writes, Bank of America is in a deeper hole than all of them. And even if you don’t keep your money there, you might end up paying for it.

It’s no secret that Warren Buffett has been selling shares of Bank of America. These details are public. What nobody has figured out is why Berkshire has sold almost all of its bank stocks since early 2020.

When the economic cycle reaches the point where corporate earnings are plunging, hundreds of companies will come under closer scrutiny and often become distressed. Investors who get in around the low point will realize huge gains. The trick, of course, is figuring out which pose the risk of bankruptcy and which do not.