Despite the fact that a solid business should be based on just as solid bonds obtained from respectable companies, one of the richest and the most successful people of the XXI century, Michael Milken managed to create more than a quick cash-in out of the junk bonds that he decided to buy for his new venture. Taking the least possible chance of all the slightest chances in the world, Milken managed to win the game, which some consider a mere stroke of luck, but is, in fact, a result of careful calculations and just as careful thinking over the value of the bonds and the related issues.
One of the most peculiar and inspiring things about Milken is not the fact that he decided to put his entire venture at stake when buying junk bonds, but the fact that Milken managed to create an entire network of these bonds. Another unusual thing about Milken’s approach is that he does not fear the risk of losses. It seems as if he already has an elaborate plan on how to act and what actions to undertake in case the whole venture is going to sink. Moreover, Milken bases his actions not only on the past experience, but also on the analysis of the existing state of affairs: ““We’ve had plenty of trillion-dollar losses before,” Mr. Milken said nonchalantly. Then, playing the role of a Zen master, he added: ‘The question is whether the future will be like the past.’” (Sorkin, 2008)
However, Millen’s success is still taken with a grain of salt by most of the influential people in the modern world. Weirdly enough, some even attribute the current financial complexities in the state to the success of junk bonds. As Sorkin (2008) explained,
The financial crisis we’re in today stems from the invention by Drexel Burnham Lambert of the junk bond,” Martin Lipton, the superlawyer who co-founded Wachtell, Lipton, Rosen & Katz, said derisively at a conference last month. “You can draw a straight line from Drexel Burnham to the financial world today.” (Sorkin, 2008)
Therefore, it seems that Milken’s reputation as a man who is best known for dealing with junk bonds is a bit marred by the fact that most of the business world considers dealing with high-risk bonds an undesirable enterprise. However, it cannot be argued that the results of Milken’s strategy are truly striking. It seems that Milken’s case is the one in which the winner takes it all. Despite people’s attempts to blemish his reputation, Milken remains certain about the success of his business: “He used more than 50 distinct types of securities in some dozen asset classes to help finance corporate growth for his clients and adapt their capital-structure needs to changing market conditions ” (The Mythology of Michael Milken, n. d.).
No matter what people might say about his dubious affairs, Michael Milken doubtlessly remains one of the financial and economical geniuses of the XXI century. Because of his ability to take the slightest chance and turn it into a huge opportunity not only for a quick cash-in, but for a stable and respectable business, he can be considered a real wonder. A true king of the junk bonds, Michael Milken deserves close attention and even closer study. Learning his unique experience is another step to understanding the ways the entrepreneurship works and the opportunities which stock market offers.
Reference List
Sorkin, A R. 2008, Junk bonds, mortgages and Milken, The New York Times, Web.
The Mythology of Michael Milken n. d., Web.