All of the big investment banks are gone, but the little ones are still around. And guess what? That's where the big brains are going. Barnett and I am on the same page when he notes:
First Boston (Steve’s old shop) was gobbled by Credit Suisse back in 1988, then Salomon Smith Barney went to Travelers, later consumed by Citicorp. In 2000, PaineWebber went to UBS, J.P. Morgan went to Chase, and Donaldson, Lufkin and Jenrette went also to Credit Suisse. AG Edwards disappears inside Wachovia in 2007, and Bear Stearns went to J.P. Morgan a few weeks back. What happened last week was the last three big independents disappeared: Merrill Lunch to Bank of America, and Goldman Sachs and Morgan Stanley convert to commercial holding banks. Lehman simply goes bankrupt. Let me be clear here: the function of investment banking does not disappear, just the large-scale independent form (meaning, separate from a commercial bank).
As Hambrecht mentioned in the video I posted not long ago, there are plenty of sectors that are doing just fine and lots of business in America that doesn't require the unique things that Goldman offered. If you want a 100 million dollar IPO, the little guys like Raymond James, Piper Jaffray and Crowell Weedon will do just fine. In fact, I heard a Crowell Weedon commercial on the radio just this morning, and I think they are going to do some crowing. Schwab's not going anywhere.
I rather like this development because I remember Brown & Company, and I dug their attitude and their animated commercials. Of course they got eaten up by E-Trade, and I'm an E-Trade guy. Well, I am now because I'm definitely getting into the market right this minute. I'm going with Warren Buffet. Of course Brown is not coming back, but the idea of being a smart investor working with a small company is. That's going to be better than ever. I'll let you know how I make out come Christmas time.
Note: There's a difference between an investment bank and a brokerage house. I think E-Trade is strictly a brokerage house, which basically means they're traders - they own seats on the exchanges. All investment banks are brokers, but not all brokers are investment bankers.
Recent Comments