Let's go shopping

Let's engage in a game that we used to play a few years behind....
...imagine that you have inherited $1 bio. and you have to invest them today. What can we buy with it?



1) 7% of JPMorgan Chase at the today's stock price
2) 25% of Washington Mutual Inc (the second largest mortgage lender in the US)
3) 3% of Merril Lynch & Co
......

If we look at the percentages, that's really not bad at all. Financial institutions are incredible "cheap" these days if you have cash.
We are witnessing very turbulent times, especially on the stock market. Companies that we have for long considered models of capitalism have filled for bankruptcy. Others are still fighting to stay alive, although they are in a coma (AIG).
But most interesting to observe is the consolidation that takes place in the economy. In the financial sector to name just a few: Merrill Lynch & Co by Bank of America in the US, HBOS (Britain biggest mortgage lender) by Lloyds TSB (commercial bank) in Europe, Washington Mutual is for sale, Reserve Primary (value of net assets of under $1).

Why is this consolidation happening? I will stop to mention just three reasons for that:
1) Liquidity and insolvency issues - with an observation, though: this is valid only for the financial industry.
2) When interest rates are low, investing in equities is more interesting.
3) General diversification reasons - decreasing risk of your own business ("don't put you're eggs in one basket"); economic, operational, financial and managerial synergies.

All in all, we are living interesting times and it's worth keeping an eye on what will happen.