2008
	Opalesque Exclusive: Drexel alums` Hegemony launches 2 funds, discusses `double standards` and was the credit crisis really God`s fault? 7/28/2008 - click to view
	newsbites By Michael Lewitt - Detroit's Continuing Crisis- featured in Welling@Weeden 7/20/2008 - click to view
	Drexel alums at Hegemony philosophize, then launch credit funds, Michael Lewitt - featured in Absolute Return 7/15/2008 - click to view
	It's Going to Get Worse by HCM's Michael Lewitt - featured in Trusts & Estates 7/1/2008 - click to view
	John Mauldin's Outside the Box- featuring Michael Lewitt of HCM. The Mean Season 6/1/2008 - Click to view
	What good's disclosure if no one gets it - Bob Moon featuring HCM's Michael Lewitt 5/12/2008 - click to view
	John Mauldin featuring Michael Lewitt of HCM. Why We Must Fix It. 5/5/2008 - click to view
	How To Fix It- by Michael Lewitt -featured in welling@weeden 4/10/2008 - How To Fix It “This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect, persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments.” Adam Smith, The Theory of Moral Sentiments (1759)
	How To Fix It- by Michael Lewitt - featured in John Mauldin's " Outside The Box" 3/31/2008 - This week we will look at what will be a fairly controversial essay by good friend Michael Lewitt of HCM. In light of today's speech by Treasury Secretary Henry Paulson of the re-organization of the regulatory system in the US, Michael suggest we look at what the real problems are before we begin the process of re-arranging the deck chairs on the Titanic. For many, some of what he says will be considered economic heresy. I do not agree with all of it (though I am in solid agreement on most of it), and look forward to talking with him in a few weeks in La Jolla when we are together. But the point of Outside the Box is not to find material that I or you agree with or that makes us comfortable, but something which causes us to think through our own opinions and biases. But this is a debate that absolutely must happen if we are to move forward and away from the current crisis and to somehow see if we can avoid yet another crisis in five years. Simply adding new regulations without changing the incentive nature of the markets will not fix the things that really matter. None of us should cry when some fund that is leveraged 30 to 1 goes down and investors get wiped out. What were they thinking anyway? But when a fund or investment bank is so big that its demise threatens the system that we participate in, something is wrong in the way our society manages risk. Simply bailing out big banks is not an adequate regulatory response. While it may work for the immediate moment, it does not solve the longer term issues. Please feel free to forward this letter to anyone you think should be part of that debate process. John Mauldin, Editor Outside the Box
	Solvency: A State of Mind - by Michael Lewitt- welling@weeden 3/14/2008 - click to view
	Take a Risk - Forbes 3/10/2008 - "Contrarians buy debt when headlines rail about a debt crisis. Like right now".
	Bond Insurers RIP - By Michael Lewitt - featured in welling@weeden 1/25/2008 - click to view
	Taking Stock : Investments by Michael Lewitt - Trusts & Estates 1/1/2008 - It Doesn't Take a Crystal Ball History and common sense tell us where the economy is headed. So, hang on-the ride is going to be rough.
2007
	Too Clever By Half ? by Michael Lewitt- featured in welling@weeden 12/21/2007 - Fed Needs To Reduce Rates To 3% And Needs To Do So Quickly
	The Wages of Financial Sin by Michael Lewitt - John Mauldin's Outside the Box E-Letter 12/3/2007 - click to view
	welling@weeden Crunch Time- Views From A Few Who Saw It Coming On What's Happening Next 8/24/2007 - click to view
	Fun in the Subprime Summer- John Mauldin- Featuring Michael Lewitt 7/19/2007 - click to view
	A Most Peculiar Regime 3/5/2007 - The Allure of Going Private One of the reasons that so many companies are going private today is that the cost of capital has been driven low enough in the private markets to make it fully competitive with public market capital. In earlier periods, companies tapped the public markets to ease their access to capital and to lower their cost of capital. Today, they no longer need to do that. Abundant low cost capital is as readily available in the private markets as in the public markets. Arguably, in fact, private capital is less expensive when one factors in the significant costs of Sarbanes-Oxley compliance and other regulatory burdens imposed on public companies, particularly smaller ones. Add to that the potential criminalization of accepted corporate practices at the drop of a politician’s or regulator’s hat, and you have the strongest incentives in history for a shift from public to private ownership. Read More
2006
	What's Under Sea of Tranquility? 11/3/2006 - Upon first hearing about the meltdown of the Amaranth hedge fund, HCM immediately thought of Karl Marx’s famous dictum that “all facts and personages of great importance in world history occur, as it were, twice…the first time as tragedy, the second as farce.” Marx’s language has evolved in the modern street saying, “Fool me once, shame on you. Fool me twice, shame on me.” Not that we would confuse anybody involved in the Amaranth disaster with the great figures in financial history, but as in every prior hedge fund collapse, Amaranth’s investors can only blame themselves for their losses. By every account, they had been informed that Amaranth had long ago morphed from a convertible arbitrage fund into an energy speculator. Read More.
	Today’s market—like any that fails to properly price risk— is setting itself up for a reversal in 2004 4/13/2006 - In 2003, the equity markets finally broke a three-year losing streak and the corporate bond market continued a strong rally that began in late 2002. Many pundits argued that the stock market recovery heralded a new bull market; others pointed out that the underpinnings of the rally were weak. In the credit markets, a lot of noise was made about a “bond bubble” as the Federal Reserve kept U.S. interest rates at record lows, while consumers and businesses continued to borrow at unprecedented levels. As 2003 progressed, two things became increasingly clear: • Investors were prepared to ignore evidence of long-term economic problems and put money to work in stocks and bonds. Significant financial imbalances simply were not being taken into account, including a burgeoning U.S. current account deficit, a sharp deterioration in U.S. government finances, an overvalued dollar, huge corporate pension shortfalls, continued structural weakness in the European and Japanese economies, increasing protectionist noises, and geopolitical risk in the Middle East and the Korean peninsula. Read More.
	Clean Up Rule 144A - Too many sophisticated investors are being kept from a key market. Or are they? 4/13/2006 - On April 30, 1990, the Securities and Exchange Commission implemented Rule 144A, which it viewed as “the first step toward achieving a more liquid and efficient institutional resale market for unregistered securities.”1 The rule enabled less-thaninvestment grade companies to issue, without prior SEC review, both straight and convertible debt as well as preferred stock. All the parties involved in the markets—investors, underwriters, issuers and regulators—viewed Rule 144A as a tremendous step forward for financial markets. It would enable companies to come to market faster, which would allow them to time the market to obtain the best terms; in turn, investors would have a greater universe of investments from which to choose. Regulators believed that requiring companies to obtain approval of their prospectuses within a six-month period would be sufficient to insure that the information in the original prospectus was accurate. Of course, regulators did retain the right to take action against companies whose filings turned out to be materially false. Read More.
	Understanding Credit Cycles and Hedge Fund Strategies 4/6/2006 - Introduction The analysis of credit cycles involves an understanding of monetary policy, financial and industry innovation, and regulatory change. However, the ability to identify in advance those moments when credit cycles veer into crisis also requires imagination, an appreciation of human folly and a willingness to imagine worst case scenarios. In order to identify times of maximum risk, understanding human psychology is at least as important as understanding economics. Credit cycles involve a combination of historical, sociological, political, economic and psychological factors that are both unique to each specific cycle and common to all cycles. Hard and soft data must be examined. The unhappy truth is that markets don’t learn their lessons very well. Financial history tends to repeat itself. The only questions are when and to what degree. Hedge fund managers charged with preserving capital and producing positive returns in both good and bad markets must pay particular attention to the etiology of credit cycles and particularly those extreme turning points that lead to financial crises that can consume years of returns in the blink of an eye. Hedge fund investors seeking positive uncorrelated returns in all types of markets must determine which strategies and managers are best suited for particular points in the credit cycle. Read More.
	Exit Federal Reserve Chairman Alan Greenspan. Enter Ben Bernanke 1/16/2006 - It remains to be seen whether anybody was playing a cosmic joke when Hurricane Wilma was tearing South Florida apart at the same time that President Bush was appointing Ben S. Bernanke to succeed Alan Greenspan as chairman of the Federal Reserve. At the end of January, Bernanke will replace a living legend was has lorded over the financial markets since 1987. This appointment is every bit as important as the American people as the Supreme Court appointments that ignited so much controversy during the second half of 2005. Many presume that Bernanke, a former Princeton University economics professor, will follow the same policies as his predecessor, the now lionized Greenspan. But if memory serves correctly, Bernanke is the same economist who once suggested that the Federal Reserve could simply drop dollar bills out of helicopters to battle deflation. Read More
	The King Is Dead, Long Live the King! 1/1/2006 - Michael E Lewitt. Trusts & Estates. New York: Jan 2006.Vol. 145, Iss. 1; pg. 33, 5 pgs It remains to be seen whether anybody was playing a cosmic joke when Hurricane Wilma was tearing South Florida apart at the same time Pres Bush was appointing Ben S. Bernanke to succeed Alan Greenspan as chairman of the Federal Reserve. As the end of his term approaches, Greenspan has been working to address the most egregious economic imbalances he is leaving behind. At press time, the Federal Reserve had raised overnight interest rates 13 straight times, pushing it to 1.0% in Jun 2004 to 4.25% in Dec 2005. As 2006 enters, corporate bonds remain overpriced and offer poor return prospects. Last year was a difficult year for even the most sophisticated investors. The change in the guard at the Federal Reserve is a potentially momentous event. People are hoping that Bernanke is equally well-equipped to handle any crises that may occur if the financial imbalances bequeathed to him by his august predecessor finally come home to roost in 2006. Read More.
2005
	Tough Times 1/1/2005 - Michael E Lewitt. Trusts & Estates. New York: Jan 2005.Vol. 144, Iss. 1; pg. 50, 4 pgs The year 2004 wasn't one in which to take chances; and 2005 is shaping up the same way. The global economy is dependent on two commodities: oil and the US dollar. Throughout 2004, the prices of both moved in the wrong direction for American businesses. How these prices play out in an economic environment characterized by globalization and deflation will dictate the direction of markets during 2005. In 2004, markets suffered from a dearth of opportunities. One of the most significant trends was the continuing flood of money into hedge funds just as these investment vehicles struggled to produce positive returns. Strategies that depend on market volatility had a particularly tough time generating decent returns. The selection of President Bush to a second term was generally viewed positively by the financial markets, although a great deal of concern was expressed about the bulging federal budget and current account deficits. Read More.
2004
	Do Away With Double Taxation of Dividends 12/1/2004 - Michael E Lewitt. Trusts & Estates. Atlanta: Dec 2002.Vol. 141, Iss. 12; pg. 59, 2 pgs The US remains one of the few major industrialized countries that taxes dividends at both the corporate and individual level. This creates an effective net tax rate on dividends of about 60%. The tax treatment of dividends leads to a massive misallocation of capital into debt and away from equity. It creates perverse incentives for corporate managements to finance excessive capital investments, enter into ill-advised mergers, and repurchase shares all in the name of building shareholder value. The problem is that most of this value went to corporate insiders during the bubble. Eliminating double taxation could have several positive effects. Read More.
	Economy Still Heading Downward 12/1/2004 - Michael E Lewitt. Trusts & Estates. New York: Dec 2001.Vol. 140, Iss. 12; pg. 17, 3 pgs The terrible events of September 11 effectively rendered moot all prior economic forecasts. Now, the economic outlook is murkier than ever. How should investors approach this highly uncertain environment? First, investors should not feel compelled to invest out of cash. One of the basic mistakes investors make is feeling they always have to act. In a bear market, the investor who loses the least is the winner. Second, if investors require higher income than that offered by today's paltry money market returns, they should nvestigate TIPs, which are inflation-indexed Treasury bonds. Third, it is more important than ever for hedge fund investors to know their hedge fund managers and to insist on transparency. Read More.
	Creative Folly 8/1/2004 - Michael E Lewitt. Trusts & Estates. Atlanta: Aug 2002.Vol. 141, Iss. 8; pg. 22, 5 pgs With the explosion in hedge funds and structured products over the past five years, it was only a matter of time before Wall Street's financial engineers created a product that combined the two. This summer, two leading hedge fund practitioners raised $750 million of new money through the issuance of two collateralized fund obligations. These obligations are composed of debt and equity tranches. They rest on not one, but two potential houses of cards: an overheated hedge fund market populated by many new and untested managers and a proliferation of collateralized debt obligations. It is far more difficult to exit from a hedge fund than to sell a bond or loan. A collateralized fund obligation anager remains completely dependent on the ability and good judgment of the underlying fund managers to protect the obligation's capital. There is no good exit from these financial instruments. Read More.
	Be Careful Out There 1/1/2004 - Michael E Lewitt. Trusts & Estates. New York: Jan 2004.Vol. 143, Iss. 1; pg. 32, 3 pgs As 2003 progressed, two things became increasingly clear: 1. Investors were prepared to ignore evidence of long-term economic problems and put money to work in stocks and bonds. 2. Investors also jumped for joy (and dug into their pockets) at every hint of an economic revival - despite the fact that evidence of real recovery was inadequate until the fourth quarter of 2003 (by which time the markets already had rallied impressively). There are two critical, and inter-related pieces of the economic puzzle that investors should watch as the year unfolds: 1. whether the Federal Reserve finally starts to raise interest rates in 2004, or waits until after the November election, and 2. the US dollar, because that will be the field upon which continuing global imbalances will play out. As 2004 begins, the financial markets and the global economy are at an inflection point. In short, investors should proceed with caution. Read More.
2003
	Out of the Ashes 2/1/2003 - Michael E Lewitt. Trusts & Estates. New York: Feb 2003.Vol. 142, Iss. 2; pg. 55, 3 pgs Between 2000 and 2002 it was generally a miserable period for high-yield bond investors. As 2003 begins, the dislocations of the past 2 years have created a new set of investment opportunities. To understand the high-yield bonds' recent depressing performance and to try to identify investment opportunities going forward, it is necessary to understand one central truth about high-yield bonds: they are not quite bonds. Rather, high-yield bonds are equity-in-disguise, or equity-with-coupons. Market conditions have created a huge class of securities that are now attractive from a risk/reward standpoint. Cross-over names are the sweet spot in today's market. More than $150 million in fallen angels have flooded the high-yield market, offering investors choice. Some are distressed, like WorldCom, but others are suitable. Read More.
2002
	The Continuing Adventures of Sisyphus? 2/1/2002 - Michael E Lewitt. Trusts & Estates. Atlanta: Feb 2002.Vol. 141, Iss. 2; pg. 24, 6 pgs While conventional wisdom holds that investors should not "fight the Fed," there is a significant risk that the economy will not experience a strong recovery in 2002. The fact that the US economy is emerging from a liquidity-driven stock market and capital spending bubble may render it less responsive to traditional monetary and fiscal stimulus than in previous recessions. When recovery does in late 2002 or 2003, it is likely to be modest in comparison to late 1990s' economic growth. Read More.
	A Slow Cure For An Ailing Economy 2/1/2002 - Michael E Lewitt. Trusts & Estates. Atlanta: Feb 2002.Vol. 141, Iss. 2; pg. 8, 1 pgs The environment facing investors in 2001 is highly complex. The prospects for the US economy in 2002 are discussed. It is also discussed why traditional monetary and fiscal policy remedies may not work this time. The problems facing the US economy may not be cured by lower interest rates or government spending. Read More.
	Long and Wrong 1/1/2002 - Michael E Lewitt. Trusts & Estates. Atlanta: Jan 2002.Vol. 141, Iss. 1; pg. 34, 2 pgs Investors have again shown themselves willing to ignore warning signs for the economy and corporate earnings in pursuit of stock market riches. Current trading levels are not justified based on the outlook for the economy or corporate profits. Recent stock market moves can be attributed to a combination of the innate optimism of investors and the pursuit of benchmarked performance. Heading into the end of a dismal year, many managers were fearful of missing out on the much-hyped recovery. For a money manager today, the only thing worse than losing money is falling short of a benchmark. Read More.
2001
	Real Recovery Not In Sight 9/1/2001 - Michael E Lewitt. Trusts & Estates. Atlanta: Sep 2001.Vol. 140, Iss. 9; pg. 20, 3 pgs The end-of-the-millennium bubble will take longer to correct than previously expected. An economic uptick likely will not happen until after the first part of 2002. For the first time since World War II, both the US and Japanese economies are experiencing recessions. European economic growth is also slowing significantly. Emerging markets have been shaken by Argentina's economic difficulties. The prognosis for a global economic recovery before the second half of 2002 is looking increasingly like a Wall Street fantasy. The announcement that US second quarter economic growth dropped to an estimated 0.7% was hardly surprising in view of the incessant flow of negative earnings reports from corporate America. There is an excellent chance that this figure will be revised downward. Read More.
	The High-Yield Bond Market in 2001 - Opportunity or trap? 3/1/2001 - Michael E Lewitt. Trusts & Estates. Atlanta: Mar 2001.Vol. 140, Iss. 3; pg. 14, 3 pgs The high yield bond market measures risk in terms of the interest rate differential between a high yield bond and the corresponding maturity Treasury bond (known as "spread"). By the end of 2000, spreads on high yield bonds had reached their widest levels since the 1990-1991 recession. The good news is that the deterioration in high yield bond prices throughout the year 2000 has created a superb opportunity to invest in the bonds of sound companies at yields in the 15%-30% range. There are three primary arguments for investing in high yield bonds at the current time: 1. History demonstrates that purchasing bonds at current spread levels has been a smart strategy. 2. The Federal Reserve is likely to lower interest rates significantly through the course of 2001, providing a positive environment for fixed income investments. 3. The relationship between supply and demand in the high yield market is improving. Read More.
	New Math or New Economy? Some Ruminations on the 1999 Stock Market Bubble 2/1/2001 - Michael E Lewitt. Trusts & Estates. Atlanta: Feb 2001.Vol. 140, Iss. 2; pg. 41, 8 pgs The stock market bubble of the late 1990s was made possible by the confluence of a global liquidity boom and the media-centric nature of new technologies. The significant volatility experienced by the stock market during 2000 - including many technology stocks' losses of as much as 90% of their peak values - demonstrates the fragile nature of a market built upon questionable intellectual ssumptions. Some of the more potent arguments that have been promulgated to support the bull market thesis are: 1. the Network Effect, 2. the Law of the Microcosm, and 3. the Law of Accelerating Returns. The intellectual flaw of the 1990s stock market bubble is that it replaced rithmetic thinking with exponential thinking. Investors made the dangerous error of equating theoretical arguments about the possibilities of new technologies with the real world math of the financial markets. Read More.
	The Investment Environment is Challenging 2/1/2001 - Michael E Lewitt. Trusts & Estates. Atlanta: Feb 2001.Vol. 140, Iss. 2; pg. 8, 1 pgs The environment facing investors and financial planners in 2001 is extremely challenging. The 1990s saw an incredible rise in US stock markets fueled by unprecedented enthusiasm for technology companies. The 1990s also saw an explosion of alternative investments such as hedge funds and private equity funds. Alternative investment strategies attempt to generate attractive risk-adjusted returns primarily by investing in assets that have been mispriced by the financial markets. The next decade will be a time when the world's investment markets' volatility and opportunity will create a challenging environment for investors. It is in such an investment environment that alternative investment strategies must be explored and ultimately become a part of a well-diversified investment program. Read More.
2000
	Grand Tour de Junk 11/1/2000 - According to the simple matrix of price and return on page 2, the junkbond market has reached a milestone: At today’s levels, it is ugly enough to be interesting. Since 1986, spreads in excess of 800 basis points over Treasurys have pointed to outsized subsequent investment returns. Spreads today are estimated at 800 to 840 basis points. In view of the shift in risk and reward, Grant’s has made an editorial determination. Always vigilant, we will henceforth devote as large a share of our vigilance budget to excesses of the downside as to those of the upside. The boom in corporate credit is over, and the subsequent contraction is under way. Value-minded investors will high-mindedly cheer this development, whether or not they are able to keep their jobs in the value-seeking portion of the investment cycle. Indiscriminate pessimism is even more prolific of mispriced securities as heedless optimism. Read More.
	The High Yield Bond Market: 1990 Revisited? 2/1/2000 - Michael E Lewitt. Trusts & Estates. Atlanta: Feb 2000.Vol. 139, Iss. 2; pg. 39, 4 pgs High yield bonds have entered the financial mainstream and today are one of the key capital sources for growing industries, including telecommunications and the Internet. The current market environment provides perhaps the best investment opportunities seen in the high yield bond market since 1990. Investors who were courageous enough to commit capital at that time were rewarded with equity-like returns. In order to understand these opportunities, it is necessary to understand the structural changes that have altered the high yield landscape in the 1990s and brought the market to its current point. Read More.
	Expensive Junk (Reprinted from BARRON'S) The High-yield bond Market faces risks aki to stocks in 2000, says a top market pro. 1/1/1900 - click to view
	August 2008 Market Letter 1/1/1900 - click to view

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