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Why Wall Street's Record Performance Spells Danger For Investors
When U.S. taxpayers bailed out Wall Street back in 2008, the consensus was that this
Main-Street-led handout would bring down the curtain on a 25-year stretch of rampant – and too often reckless – speculation.But that hasn't been the case.
In fact, in some areas, Wall Street deal volume is running at record levels.
In most cases, when an industry, sector or business is humming along and setting all sorts of records, that's very good news. It means profits are high, firms are hiring and shareholders are happy.
But when it's Wall Street setting the records, it can mean there's trouble ahead – lots of trouble. For instance, while overall profitability is down, those bottom-line figures do not determine Wall Street bonuses, which are expected to set a new per capita record. Junk bonds are being issued at double the previous record rate. Merger deals are cooking. And private equity is humming.
Smart investors will take steps to protect themselves from the looming fallout.
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