Morgan Stanley 2009 Annual Report Download - page 22

Our liquidity and financial condition have in the past been, and in the future could be, adversely affected by
U.S. and international markets and economic conditions.
Our ability to raise funding in the long-term or short-term debt capital markets or the equity markets, or to access
secured lending markets, has in the past been, and could in the future be, adversely affected by conditions in the
U.S. and international markets and economy. Global market and economic conditions have been particularly
disrupted and volatile during the past two years, with volatility reaching unprecedented levels in the Fall of 2008
and into 2009. In particular, our cost and availability of funding have been, and may in the future be, adversely
affected by illiquid credit markets and wider credit spreads. Renewed turbulence in the U.S. and international
markets and economy could adversely affect our liquidity and financial condition and the willingness of certain
counterparties and customers to do business with us.
Market Risk.
Market risk refers to the risk that a change in the level of one or more market prices of commodities or securities,
rates, indices, implied volatilities (the price volatility of the underlying instrument imputed from option prices),
correlations or other market factors, such as liquidity, will result in losses for a position or portfolio. For more
information on how we monitor and manage market risk, see “Qualitative and Quantitative Disclosure about
Market Risk—Risk Management—Market Risk” in Part II, Item 7A herein.
Our results of operations may be materially affected by market fluctuations and by economic and other
factors.
The amount, duration and range of our market risk exposures have been increasing over the past several years,
and may continue to do so. Our results of operations may be materially affected by market fluctuations due to
economic and other factors. Results of operations in the past have been, and in the future may continue to be,
materially affected by many factors of a global nature, including political, economic and market conditions; the
availability and cost of capital; the liquidity of global markets; the level and volatility of equity prices,
commodity prices and interest rates; currency values and other market indices; technological changes and events;
the availability and cost of credit; inflation; natural disasters; acts of war or terrorism; investor sentiment and
confidence in the financial markets; or a combination of these or other factors. In addition, legislative, legal and
regulatory developments related to our businesses potentially could increase costs, thereby affecting results of
operations. These factors also may have an impact on our ability to achieve our strategic objectives.
The results of our Institutional Securities business segment, particularly results relating to our involvement in
primary and secondary markets for all types of financial products, are subject to substantial fluctuations due to a
variety of factors, such as those enumerated above that we cannot control or predict with great certainty. These
fluctuations impact results by causing variations in new business flows and in the fair value of securities and
other financial products. Fluctuations also occur due to the level of global market activity, which, among other
things, affects the size, number and timing of investment banking client assignments and transactions and the
realization of returns from our principal investments. During periods of unfavorable market or economic
conditions, the level of individual investor participation in the global markets, as well as the level of client assets,
may also decrease, which would negatively impact the results of our Global Wealth Management Group business
segment. In addition, fluctuations in global market activity could impact the flow of investment capital into or
from assets under management or supervision and the way customers allocate capital among money market,
equity, fixed income or other investment alternatives, which could negatively impact our Asset Management
business segment.
We may experience further writedowns of our financial instruments and other losses related to volatile and
illiquid market conditions.
Market volatility, illiquid market conditions and disruptions in the credit markets have made it extremely
difficult to value certain of our securities. Subsequent valuations, in light of factors then prevailing, may result in
significant changes in the values of these securities in future periods. In addition, at the time of any sales and
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