Deutsche Bank Lost Some Money Sometime
Also collars, Theranos and connectivity fees.
What is going on in this Wall Street Journal story about how “Deutsche Bank AG racked up a loss of $1.6 billion over nearly a decade on a complex municipal-bond investment”? The basic plot seems to be:
First of all, that is a big loss, no? Looking at the total return of the Bloomberg Barclays Municipal Bond Index, it was up more than 50 percent over the life of this trade, with only two down years in 2008 (down 2.5 percent) and 2013 (down 2.6 percent). You could have steadily racked up losses of more than 20 percent on a diversified municipal-bond trade over that eight-year period—and some of Deutsche’s bonds seem to have been from Puerto Rico, so sure—but it would have taken either careful security selection or a certain amount of structuring.