Nostradumbass Strikes Back….from the Mish Shedlock blog

[JWM in SD]

….”Collateralized loans were sliced and diced into tranches, further pooled and sliced again into “CDOs squared” with some investors buying a single tranche and others buying a slice of all tranches. Roughly 18-20% of those debt packages to foreign investors, 18-20% going to pension plans, 18-20% of it going to life insurance companies, and 18-20% of it going to hedge funds (some of which are now bankrupt). I defy anyone to straighten that all out.”

So you think you’re safe from this mess right? You don’t own any real estate or have scrupulously avoided excess consumer debt. Well guess what, you ain’t safe if you’ve got a 401k, pension fund, money market fund.

So you think that the all of the 200K plus individual (key distinction there) earners who bought 10 plus years ago in Carmel Valley won’t be affected by what is happeing right??

Get Your Head Out Of Your A**!!!

Unless people here start waking up to the reality of what’s going on in the macro environment you will be affected no matter if you are an FB or a died in the wool housing bear.

[JWM in SD]

Personally, I don’t really even care about housing prices anymore…that is an after-thought best left to the back of my mind at least until after I have ensured relative financial survival over the next several years.

Housing prices are going to go down a lot in Socal over the next several years…that is all I need to know. I don’t care about exact timeframes or what the nominal decline %’s are. This is why I don’t suffer fools very well who insist on coming here asking about how much to offer right now for 4S Ranch SFH or whining about why Carmel Valley homes have not declined enough yet.

The visual / saying that comes to mind is: Picking up dimes in front of a moving steam roller.

[SD Realtor]

JWM there are also investments by county and state governments as well. Don’t forget even money markets although I would hope it is a small fraction of a given money market portfolio.

It does suck.

SD Realtor

[Coronita]

So you think that the all of the 200K plus individual (key distinction there) earners who bought 10 plus years ago in Carmel Valley won't be affected by what is happeing right??

Get Your Head Out Of Your A**!!!

Unless people here start waking up to the reality of what's going on in the macro environment you will be affected no matter if you are an FB or a died in the wool housing bear.

 

I don't think anyone is disagreeing with you that everyone will be somehow indirectly affected. But it's all relative to everyone else.

What's the fascinating with $200k households and hedge funds? The two don't compute in my book. A $200k or even $300k household income doesn't by itself give one access to hedge funds. There are other financial requirements to qualify, yes/no?

401k. So this is were I would go and say that a properly diversified portfolio shouldn't have an issue if part of your investment choices get wiped out.

 

Money market funds: Note to self. Move the last $3000 out of a GMAC demand note account into a FDIC insured bank.

 

[JWM in SD]

Oh really FSU? Well, how about this from the International Herald Tribune:

http://www.iht.com/articles/2007/09/02/business/morgenson.php?page=1

“Ronald Greene, 79, a retiree in Northern California, is one investor watching the Bear Stearns case closely. Greene lost $280,000 in the Bear Stearns High Grade Structured Credit Strategies Fund and says he will join a suit that has been filed against the firm. He contends that Bear Stearns duped him with assurances that the fund’s high-quality investments would protect holders against market and credit risks.

Hedge funds are theoretically open only to institutional investors and extremely wealthy individuals, who are deemed savvy and well heeled enough to assess and weather complex risks. But documents from Greene’s files show that Bear Stearns Asset Management allowed investments of $250,000 in its fund, considerably smaller than the typical $1 million minimum for many hedge funds.

On July 20, 2005, Greene received an e-mail message from his broker at a small regional firm, with the following header: “Bear Stearns High-Grade Structured Credit Strategies Fund will accept smaller investments this month on a limited basis.” Noting that the fund was temporarily reopening on Aug. 1, 2005, the message said that for investors who “do not have $1,000,000 to invest, the fund will accept a limited number of clients this month for 500K and perhaps 250K.”

[JWM in SD]

“401k. So this is were I would go and say that a properly diversified portfolio shouldn’t have an issue if part of your investment choices get wiped out.”

Methinks you don’t understand how leverage works. It won’t matter if your fund is diversified if they don’t allow you to pull your money, it is already gone.

[Author]

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