Seeking Cover If the Prices of Homes Fall from the New York Times, concludes that the Case-Shiller housing index is a hedging tool best left to the pros. A difficulty with the product is that the positions are weighted more heavily in favor of homes prices declining (lenders, homeowners, builders), and without oppositing positions (i.e. homes prices will rise), the liquidity for trading isn’t there.

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Mr. Mueller advised homeowners to hold off “until there has been at least a year of trading and you can see there’s liquidity.” Otherwise, “you’ve bought an option, you want to get out and no one’s buying today, or all week, for that matter.”

Mr. Cordaro is hoping that institutional investors will take to the new vehicles and then “individuals can piggyback on it.” But he counseled against using them to gamble.

“I wouldn’t speculate,” he said. “I really hope folks will stay away from that. You can lose a lot of money speculating. Leave that to the pros.” END QUOTE