"Tin Foil Hats" infiltrate Merrill Lynch

[barbarus]

Obvious nonsense, right guys? Must be some sort of elaborate joke.

MarketEconomist.pdf

This is certainly not what the government or many ERF posters have been preaching.

The work of Bolsheviks? malcontents? Democrats??

[clifp]

Hey if you worked for a firm that wrote down 24 billion in fixed income (primarily sub prime) last quarter you might be a little gloomy about the future also.

Personally, I love bears. I just hope they are selling and not just talking about selling.

[chinaco]

There will likely be regulation changes as the result of the sub-prime debacle and for credit in general.

It would not surprise me to see it become a bit more difficult to get secured loans of any type going forward. I suspect that people who have marginal credit history (below sterling) will start to be scrutinized much more and be held to other standards than just higher loan rates (they will be rejected). Why? I believe average investors will be much more of buying the paper now that they know the effect. If banks have to keep the paper, they will be much more choosy. If they have to pay a penalty to sell it off (to get someone to take the loan off their hands) they will not write the business.

Unsecure loans (credit cards) are likely to be tightened as well... Too much risk in the credit market place is bad for all of us... not just the @$$h0!3 predatory lenders and fools who take them up on the loan. This could be the reason AMEX is auditing certain customers. It might be random... but it is much more likely a targeted check to keep risk under control.

[2B]

chinaco points out the likely short term change until things "settle down." Everyone needs to remember back just a couple of years ago that various congressmen and senators were accusing lenders of "racism" because blacks and hispanics were being turned down for loans more that whites and asians. Credit scores and income didn't seem to be an acceptible defense so the great subprime market was created and less credit worthies of all complexions joined in. Now "congress" is shocked and appalled that lenders would give loans to people that they "couldn't afford." Our politicos will get back on the racial equity bandwagon as soon as housing "recovers."

[chinaco]

Quote:

Originally Posted by 2B chinaco points out the likely short term change until things "settle down." Everyone needs to remember back just a couple of years ago that various congressmen and senators were accusing lenders of "racism" because blacks and hispanics were being turned down for loans more that whites and asians. Credit scores and income didn't seem to be an acceptible defense so the great subprime market was created and less credit worthies of all complexions joined in. Now "congress" is shocked and appalled that lenders would give loans to people that they "couldn't afford." Our politicos will get back on the racial equity bandwagon as soon as housing "recovers."

Yes politics is involved.

But, what I keep hearing is that bank, mortgage companies, investment houses, were caught by surprise. Not sure that i believe them. But they underestimated the impact of the bubble on their organizations. Let's assume it was true. Then better mechanisms are needed to just the macro economic effect (and macro effect on debt/equity markets) of risky paper on all of us (aside from the said businesses). I suspect that this will be a lesson learned for some individuals businesses and investors. I personally believe better regulation is needed. Some might say investors are willing to take the risk... however, the average investor has little insight or knowledge about what these businesses are doing. Perhaps what is needed for banks is something akin to Risk Based Capital limits and reporting. It might take regulations similar to the insurance industry. This would cap the amount that each bank could hold and therefore limit the amount the overall domestic market could hold. For investors... reporting that is clear and unambiguous might suffice, but I am not sure.


This debacle does reinforce the importance of broad diversification. One can not know where crisis will strike the investment markets and the economy.

Look at this: Report: Cuomo Gets Cooperation in Probe: Financial News - Yahoo! Finance

That's good. Put a bunch of them in jail.

[thefed]

did anyone else notice that the link in the OP leads to a softcore porn site? am i missing something?

[Notmuchlonger]

Quote:

Originally Posted by thefed did anyone else notice that the link in the OP leads to a softcore porn site? am i missing something?

Didn't bother. Since why would you pay attention to what Merrill had to say after they did such a great job with all that subprime.

[clifp]

You probably need to disable your pop up blocker; in oreder download the PDF containing the ML report linke is in the middle left of the screen. Yes I had probably initially.

I Didn't notice any softcore porn

[cute fuzzy bunny]

I'm liking it. The louder the screaming, moaning and lamenting of the weak usually precedes a positive period for investors.

[cute fuzzy bunny]

On the whole idea of diversification...I was thinking earlier that it might actually be counterproductive. Sure, something is always up when other stuff is down, but if you do it right, you've ALWAYS got something going down.

Maybe we all oughta just put all of our assets into one thing, then we'd only have one thing to worry about and only a chance of one thing going down.

Now if there were only some investment thats almost always doing well...

As an alternative, we could group together in bands of 4-5 and each one of us could hold all of one asset class for the group. Then 3-4 of us would be happy most of the time.

[twaddle]

Quote:

Originally Posted by cute fuzzy bunny Maybe we all oughta just put all of our assets into one thing, then we'd only have one thing to worry about and only a chance of one thing going down. Now if there were only some investment thats almost always doing well...

When Bernanke was made Fed Chairman, he was forced to disclose his portfolio.

100% Altria. Addictive. Legal. New customers being born all the time. He's a genius, I tell ya.

[FinanceDude]

Quote:

Originally Posted by twaddle When Bernanke was made Fed Chairman, he was forced to disclose his portfolio. 100% Altria. Addictive. Legal. New customers being born all the time. He's a genius, I tell ya.

I remember reading that Phillip Morris outperformed something like 95% of all mutual funds over a 50 year time frame. I'll try to find the source..........

[audreyh1]

Quote:

Originally Posted by twaddle When Bernanke was made Fed Chairman, he was forced to disclose his portfolio. 100% Altria. Addictive. Legal. New customers being born all the time. He's a genius, I tell ya.

WOW! He is a genius!

Audrey

[Retire Soon]

Merrill Lynch reminded us that housing prices increased by 130% from 2000 to 2006. Prices have dropped 7% so far and are still in free fall. They anticipate another 30% price drop between now and the end of 2009, for a total loss of 37%. This seems very reasonable in light of the huge increases during the first six years of this decade. It makes me seriously wonder how plans may have been derailed for countless retiring baby boomers who planned on downsizing into smaller homes and banking the difference in home prices.

[73ss454]

Well, the smaller homes went down in price also. It's all relative!

[Retire Soon]

Quote:

Originally Posted by 73ss454 Well, the smaller homes went down in price also. It's all relative!

If you were to sell a home in 2005 for $600,000 and downsize to one for $300,000 you could bank $270,000 (after 5% commission). On the other hand, if you sold the same home in late 2009 (after prices decline 37%) for $378,000, and purchase another for $189,000, you could bank $170,100 (after 5% commission). The difference is $99,900. At a 4% SWR that would give a retired couple nearly $4,000 in additional income for the rest of their lives!

[FinanceDude]

Wonder what wisdom Kiyosaki is espousing these days.........

[CCdaCE]

Kiyosaki's been catching a falling knife, pouring money down the drain, investing in the market since Aug. '07, apparently.

Then he rambles on about only investing during the "middle 60%" of the runup.

Then he rambles on about how he put every spare nickle into gold and silver in the 90's.

The older he gets, the better he was. Gimme a break.

He might've hit one nail on the head.

Quote:

One of the better companies I've been buying is a bulk cargo shipping company that's hauling U.S. grains to India.

-CC

[KBGA]

So what is the name of the shipping company?

[cute fuzzy bunny]

Well see? And I'll bet you guys were laughing about my "undiversification" plan. Here is the guy in charge of the direction of the US economy, and he's got just one stock.

Must work great for him. Except for the occasions where someone sues Altria, his days are pretty darn good.

On a more serious note, I've held MO off and on for some time, as its obviously been a great money maker and a good dividend payer. With all the anti smoking laws, cultural bias issues, and ever shrinking percentage of smokers I have to wonder if it'll continue to be a cant-miss.