nativenewenglander
Recycles dryer sheets
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- Feb 25, 2017
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LOL.
Any chartists, you bailing while you can.
- Thread starter misterantsypants
- Start date
copyright1997reloaded
Thinks s/he gets paid by the post
It doesn't have to be the same thing - it can be a different thing. The 1987 crash was blamed on 'portfolio protection' schemes. 1998's brief scare based on currency devaluations. 2001/2 due to the dot.com bubbled. 2008 CDO/swap's. And so on. If 2018/9 is worse than a bull market selloff or a mini-bear (e.g. 20-25%), we may look back and be able to blame something else, perhaps the ETF passive investing mania.
I'm not saying this is going to happen, just saying we won't know until it does happen.
flyingaway
Full time employment: Posting here.
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Did you know "collateralized debt obligations or credit default swap’s were bad things" in 2008?
People only know the problems after the market crashes.
HI Bill
Thinks s/he gets paid by the post
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In 2003, Warren Buffet infamously called CDSs both "a time bomb" and "weapons of mass destruction". He clearly understood the risks, and made them public in interviews, following words with action: He directed Berkshire Hathaway to exit the CDS business.
In Maui, I saw condos at record low prices in 1998. You could buy a starter condo for $78K. A quarter mile from the beach. I bought one in 1999 for $100K, and sold it five years later for $200K. During this time, a 20-year old realtor friend was making tons of money buying and selling real estate. He took out a HELOC and bought a jet ski and rescue board.
By 2004, prices for the same condo had reached $350K, and topped at ~$405K. Regretful of my decision to sell my first condo, I bought a second, similar condo, at a high price of $350K. I held onto it for a year as a rental. By then, prices had peaked, and I realized that they had reached the 'limits of affordability' for the workers on Maui. Determined to sell, and against the advice of my Maui realtor friend, I listed the condo at something like $410K, and kept reducing the price to be the lowest in the complex. Eventually, I sold at something like $401K, just as the market proceeded to tank. Eventually, these condos re-bottomed around $190K. BTW, a financial institution gladly loaned me money for the condo, even though I really could not afford that and my other life expenses, unless it was rented out! They quickly rebundled my loan with others and sold it to another financial institution (Chase, I believe). Lending practices started to get risky.
At this time, my mom had purchased a small house in rural Texas. In a place where real estate rarely kept pace with inflation, they were seeing appreciation. The jobs and economy there were no better than before. House flipping shows were one of my TV favorites. I knew we were in trouble, but did not anticipate the magnitude of the problem.
Looking back, greed, on both the part of lenders and buyers, TV (house flipping shows), large banks making wreckless investments, CDSs, and other WMD, helped sow the financial crisis. Reminds me of the "Wolves of Wall Street". It's ok to make money, regardless of how, and whether any value is being created.
So yes, I've enjoyed the post-2009 stock market ride. But I do think it's going to get a bit bumpy.
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CDO's and CDS still being used today
Why do you think Collateralized Debt Obligations and Credit default Swaps are bad things? They were around way before 2008 and are still being used today.
Why do you think Collateralized Debt Obligations and Credit default Swaps are bad things? They were around way before 2008 and are still being used today.
HI Bill
Thinks s/he gets paid by the post
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Because they largely contributed to the 2008-2009 real estate market crash. They are bad things because they are insurance based on statistics, and outliers can happen. I'm sure some make lots of money off of them, but they allow investors (banks) to make risky loans that they would otherwise never undertake. JMHO.
haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Everything no matter how questionable it may be nevertheless has an upside for somebody. Otherwise it would not exist. The more credit, the more business gets done.
IMO, a lot of the problems with securitized debt would be avoided or greatly alleviated if the originator of the loan had to retain a portion of it that would be meaningful to that originator.
Ha
HI Bill
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I agree completely with your second statement. Regarding the first: just because something exists, and has an upside for somebody, doesn't mean it should exist, as it may cause unreasonable losses/damage or risk or exposure to others through no fault of their own. In my world, there would be no short selling. At all. Just one example of something that exists, with sometimes positive market influences, but often times, more destructive to the equity that's being shorted, without real cause. JMHO. Just look at the short seller's effects on Tesla. Most of their 'research' and 'fears' were unfounded, aimed squarely at causing the price of the stock to drop, benefiting only those who contributed nothing to the creation of anything, other than their own profits.
"The more credit, the more business gets done." THIS is what caused the 2008-2009 real estate crash. Credit with no/loose income verification, and loosening of the lending standards. Did this help more business get done? Absolutely! Was it good for the banks, lenders, and bank equitey holders when the foreclosure started? Absolutely not.
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I think a divided congress would be good for the markets. Somebody has to push back against constant threats of more tariffs. I think that is spooking the markets the most.
haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I appreciate your reply. All I was trying to show is that most things seem to exist in a dynamic and given what humans are, often unstable tension. It is not credit per se, but foolishly extended credit that caused the big losses. But in any imaginable world, where there is credit being extended, sooner or later credit will being foolishly extended to many of the wrong borrowers. Some of this is due to glaring faults in the system. Yet many of these faults help some people or groups, and those groups have a powerful motivation to see to it that these systemic flaws do not get remedied, or if they do, the remedies are cancelled or blocked. C’est la vie!
Ha
copyright1997reloaded
Thinks s/he gets paid by the post
While congress has the constitutional power over tariffs:
congress ceded a lot of authority to the executive branch via the Trading with the Enemy Act of 1917, the International Economic Powers Act of 1977, and the trade act of 1974, and other legislation giving the executive branch power to instate and keep Tariffs. As a side note, import tariffs were the major revenue source for the federal government from our founding until the income tax was instantiated.
rtroxel
Recycles dryer sheets
The market, in 2019, will go up, go down, or maybe stay the same. And that is what I will 'act' upon (if taking no action can be considered an act).
Doesn't the market always do that?
Roy
Doesn't the market always do that?
Roy
Dtail
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Agree with the second statement too.
CDO's and CDS's are great for some traders in the market, not so much for everyone else.
OK, for morons the market in 2008 did not go up 50%, but it did go down in 2009.
The market go up, market go down, is for low thinking no brains.
Invest when market is down do not assume you are OK to amble along as a do nothing.
The market go up, market go down, is for low thinking no brains.
Invest when market is down do not assume you are OK to amble along as a do nothing.
