Look at the smallest line on the front page of a financial newspaper dated Monday, September 15, 2008. At the top: the Dow Jones Industrial Average at 11,421.99, up 1.8% the previous week. On the same page, three charts: Lehman down 94.4% year to date, AIG down 79.2%, Merrill Lynch down 68.2%.
The index had been climbing while three of its institutions were coming apart. That is not a contradiction. It is what concentrated risk looks like from inside an average: absorbed, absorbed, absorbed, until it is not. That Monday the Dow fell 504 points.
The same lesson, applied to credit
A loan portfolio can show healthy aggregate delinquency while a handful of large exposures deteriorate. A securitization can meet its overcollateralization test while its largest borrowers account for a growing share of the pool. Averages smooth out exactly the information that matters most.
What to look at beyond the headline
- Concentration by borrower, sector, region and vintage.
- Exposures without periodic amortization and bullet maturities.
- Related-party loans and their disclosure.
- How the top ten exposures behave, not only the total.
Eighteen years on, the question is not about the market. It is about your portfolio: what is your headline number hiding?
Adapted from a post by Orlando Zendejas, CFA, on LinkedIn (September 15, 2026).
This content is for informational purposes only and does not constitute investment advice or an offer of securities.
