[quote=spdrun]Not hoping for a systemic crash, but Dow dropping to 9 or 10k inside of a few months would be awesome. Besides, a lot of the “imminent systemic crash” hype was just that — [/quote]
Well, that’s good that you’re not hoping for a systemic crash. But again, I reiterate that what you saw back in 2007 – 2009 wasn’t a normal bear market or simply the stock market crashing.
And no, it wasn’t just “hype”. I’m not sure how involved you are with the financial markets but I can tell you that it wasn’t just “hype”. Look at all the CDOs, SCDO’s, SIV’s, SPE’s, HCDO’s, CDPC’s, and other very toxic derivatives from 2000 to 2006 and it was some scary stuff! The exposure out there was very frightening. I mean look at Lehman Bros. A company that was around for 160+ years. You’re talking about the 4th largest investment bank in the USA. What successfully lasted for 160+ years was undone in a very short period of a few years with leverage. Just one example of many.
And yes, most people that use leverage will tell you that they use it responsibly. After all, how many people have you met that told you that they were irresponsibly using leverage???? LOL. You will probably NEVER hear those words out of someone that is using leverage. They ALWAYS tell you how they are using it responsibly or why it makes sense in THEIR situation.
Heck, even these investment banks that were using insane leverage were fighting off regulators that tried to reign in on their insane leverage multiples. NO ONE will admit they are irresponsibly using leverage. That’s human nature.
And of course you will have many examples of people out there that have almost no retirement savings, credit card debt, kids coming up in college and don’t have savings for them….. Yet they will tell you why they HAVE to take that HELOC so they can renovate their house. They will tell you how it’s wise…yadda yadda.
Some of my friends and clients were at the highest levels of some of these banks and also I have friends at the Federal Reserve Bank. Yes, it could have been close to a systemic crash. That isn’t some hype.
I’m glad that you made money during those tough times and all the power to you if you like volatility but you can’t try to downplay what went on. It was some scary stuff that I hope we never have to think about again.
