Capital Structure Drift
Years ago, on a Sunday morning flight home to San Francisco from LA, I opened a new novel Iโd been looking forward to: ๐ ๐๐ข๐ฑ ๐ฐ๐ง ๐ต๐ฉ๐ฆ ๐๐ฐ๐ณ๐ญ๐ฅ by Jane Hamilton.
I started to read and then sat for a while with the book open on my lap. A woman across the aisle noticed the cover and told me she’d read it and loved it. We spent several minutes talking about the book before she asked how far along I was.
โOne paragraph,โ I said.
The part that stayed with me wasnโt the falling from grace.
It was โ๐ ๐ฐ๐ถ ๐ฅ๐ฐ๐ฏโ๐ต ๐ฏ๐ฆ๐ค๐ฆ๐ด๐ด๐ข๐ณ๐ช๐ญ๐บ ๐ด๐ฆ๐ฏ๐ด๐ฆ ๐ต๐ฉ๐ฆ ๐ฎ๐ฐ๐ต๐ช๐ฐ๐ฏ.โ
Most capital structures donโt fail because of a bad decision. They can fail after one reasonable decision after another.
Each decision made sense in the pricing room.
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