Forum Replies Created
-
AuthorPosts
-
Bubblesitter
ParticipantWhile many hedge funds are having problems these days, some are doing spectacularly well.
Excerpt from Marketwatch,
”
SAN FRANCISCO (MarketWatch) – A hedge fund run by $20 billion firm Paulson & Co. has surged 410% so far this year as subprime bets paid off.
The Paulson Credit Opportunities fund, set up last year to take advantage of potential mortgage turmoil, returned 26.67% in August, leaving it up 410% in 2007, according to a person who has seen the firm’s most recent performance update. ”ParticipantLTCM – Long Term Capital Management. These guys were always the smartest guys in the room. Myron Scholes (of Black&Scholes fame) and Robert Merton who shared the 1997 Nobel Memorial Prize in Economics founded this Hedge fund.
It failed spectacularly in 1997. Up until recently Hedge fund collapses had been rare, now we are seeing increasing numbers fail. http://hf-implode.com/
LTCM analysis has been a staple of MBA programs for a number of years, there is HBS case study on it.
More on LTCM at
http://en.wikipedia.org/wiki/LTCMHere’s an excerpt,
“The company had developed complex mathematical models to take advantage of fixed income arbitrage deals (termed convergence trades) usually with U.S., Japanese, and European government bonds. The basic idea was that over time the value of long-dated bonds issued a short time apart would tend to become identical. However the rate at which these bonds approached this price would be different, and that more heavily traded bonds such as US Treasury bonds would approach the long term price more quickly than less heavily traded and less liquid bonds.”Bubblesitter
ParticipantThe correlation between between 30yr fixed mortgage interest rates and 10 yr treasury yield seemed to break down in early Aug, just when the liquidity/credit crunch started to hit the fan.
All sorts of interesting things went screwy around that time. A number of the “quant” hedge funds were caught off gaurd when the market did not behave as predicted.
These recent liquidity and credit crunch events will keep PhD economists busy for years. I can see alot of dissertations coming out of this one. This will make the LTCM fiasco in the late 90s look like child’s play.
ParticipantMortgage Brokers are in for a rough ride ahead. They are now getting laid-off en masse, it will only get worse in coming year. There is now legislation via “The Homeownership Preservation and Protection Act” that will force regulation on the industry. One provision will create a fiduciary relationship to the borrower, in other words the Broker must act in the borrowers best interests. No more steering borrowers to high interest loans? YSP going away?
So not only is their volume dropping, their profitabilty on a given loan will be tanking. Time to exit the industry if I were a Mortgage broker.
ParticipantThe blame game is hitting the mainstream media.
http://money.cnn.com/galleries/2007/fortune/0709/gallery.subprime_blame.fortune//index.html
ParticipantIt is interesting seeing the backlash against all those who got in over their heads, caught up in bubble frenzy.
This was particularly evident in run up to Bush’s mortgage relief plan announcement last friday. The mainstream media, OPed pages where proclaiming “no bailout for flippers”.
A note to the scam victims, many may be good christians as the site claims. One of the 7 deadly sins is greed.
ParticipantI certainly have some sympathy for the victims, however these victims should also be looking into their own soul. Were you looking for a quick buck? Did you get wrapped up in the bubble frenzy?
As the old adage goes “if it is too good to be true it probably is”.
Guys, always be very vigilant with your money. I certainly hope the DA goes after these guys. There are fraudsters and hucksters everywhere. Who in their right mind would invest in any of the following? This is just plain dumb.
Pulled from the victim’s website http://www.coreclient.110mb.com/
There are several alleged schemes operating concurrently, with some victims only involved in a single scheme and many others victimized in multiple schemes (this was dependent upon your ‘credit-worthiness’). The schemes are as follows:
1. Real Estate Investment Scheme required you to refinance primary residence and give them proceeds to invest in real estate. They ‘promise’ to pay the additional debt burden on your property. They then buy you ‘investment properties’ and wire mortgage payments for you to pay the note. A few months later they sell the property and ‘HIJACK’ the proceeds to their bank accounts, have you Quit Claim Deed it over to Total Return Fund, or just stop sending you mortgage payments so that you default on the loan. They also over-inflated appraisals and skimmed money off. They were to use the proceeds of your refinance to open up a brokerage account in your name to invest in stock, commodities, currency, precious metals, and diamonds.
2. Equity Sharing Real Estate Scheme is their newest scheme where they state they are buying you a property and will give you 6-9 months worth of mortgage payments. Problem is, once you sign the loan docs, you never see a penny of the money promised and you will quickly default on the property. (these are the scammers’ properties that they are trying to unload)
3. Total Return Fund/300%/ Credit Card Scheme is where they open multiple lines of credit for you and then instruct you to pull proceeds off these cards and wire them the money. You have a difficult time claiming fraud as you pulled the money off the cards they opened up. You followed their instruction because remember, “Clients do what they are told without question or they are either ejected from the program or passed over for the next amazing opportunity.” This one they also ‘promise’ to pay the credit cards back.
4. Special ‘Short-term Currency Investment’ Scheme where they claim you will be given the proceeds of your investment after 6 months as a reward for being such a good client. Many clients accessed personal savings and 401k retirement accounts for this opportunity. This resulted in a delivery of Irai Dinars far below the fair-market value sum.
5. Credit Repair Scheme where they take your credit that they screwed up and then ‘promise’ to repair it. How very generous of them.
6. Total Return Distress Property Scheme whereby you purchase membership units at a set rate for distressed properties that Total Return Fund rehabs and sells at a profit.
Services and Investment Plans are constantly changing but the players remain the same.September 1, 2007 at 8:14 AM in reply to: cannot wait anymore, buying a condo now instead of a house at 4S Ranch, and wait to buy a bigger house later? #82922ParticipantAsk her if we wants to stay in that condo for 10 years.
You will be underwater very quickly and stuck there for a while.
If she is ok with that, then go ahead and buy it.
Bubblesitter
ParticipantPlease note, the following are just some of my personal comments on gold. I am not an investment adviser. I do hear alot of confusion about gold in general.
I believe one of the best ways to invest in gold is thru an ETF such as Streetracks GLD or iShares IAU. Commodity ETFs are listed on the stock exchanges and offer investors
exposure in the underlying commodity such as gold without taking physical delivery. Gold ETFs buy a matching amount of gold from the market to keep in bank vaults. You buy the share at typically 1/10 the spot price.I feel that all these other gold offers are waste of money, e.g. gold coins come with high fees, it also costs money to insure.
Please don’t go crazy with gold, I’m personally keeping it less than 15-20% of my portfolio. Be careful, gold does has volatility, as we have seen in recent weeks. I’m keeping only as a long term hedge against dollar depreciation.
Gold prices has actually dropped in recent weeks as investors have covered losses and many feel that demand for gold will decrease as we may go into recession. Industrial use of gold is still a big gold user, e.g. gold plated electronics connectors.
In recent weeks, investors big and small have been liquidating gold to cover margin calls/losses on Wall street, here’s an article on this.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ajSEk5FMPqqM
ETFs have made gold an even more liquid asset, more on this on article on “The Street” on how gold has become more correlated with the market in recent years.
Bubblesitter
ParticipantLast one got truncated….here’s the full response
Please note, the following are just some of my personal comments on gold. I am not an investment adviser.
I believe one of the best ways to invest in gold is thru an ETF such as Streetracks GLD or iShares IAU. Commodity ETFs are listed on the stock exchanges and offer investors
exposure in the underlying commodity such as gold without taking physical delivery. Gold ETFs buy a matching amount of gold from the market to keep in bank vaults. You buy the share at typically 1/10 the spot price. More info here.http://www.smartmoney.com/fundinsight/index.cfm?story=20070712
I feel that all these other gold offers are waste of money, e.g. gold coins come with high fees, it also costs money to insure.
Please don’t go crazy with gold, I’m personally keeping it less than 15-20% of my portfolio. Be careful, gold does has volatility, as we have seen in recent weeks. I’m keeping only as a long term hedge against dollar depreciation.
Gold prices has actually dropped in recent weeks as investors have covered losses and many feel that demand for gold will decrease as we may go into recession. Industrial use of gold is still a big gold user, e.g. gold plated electronics connectors.
In recent weeks, investors big and small have been liquidating gold to cover losses on Wall street, here’s an article on this.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ajSEk5FMPqqM
ETFs have made gold an even more liquid asset, more on this on article on “The Street” on how gold has become more correlated with the market in recent years.
Hope this helps,
BubblesitterParticipantPlease note, the following are just some of my personal comments on gold. I am not an investment adviser.
I believe one of the best ways to invest in gold is thru an ETF such as Streetracks GLD or iShares IAU. Commodity ETFs are listed on the stock exchanges and offer investors
exposure in the underlying commodity such as gold without taking physical delivery. Gold ETFs buy a matching amount of gold from the market to keep in bank vaults. You buy the share at typically 1/10 the spot price. More info here on smartmoney.http://www.smartmoney.com/fundinsight/index.cfm?story=20070712
I feel that most other gold offers are a waste of money, e.g. gold coins come with high fees, + it also costs money to insure.
Please don’t go crazy with gold, I’m personally keeping it <15-20% of my portfolio. Be careful, gold does has volatility, as we have seen in recent weeks. I'm keeping only as a long term hedge against dollar depreciation.
Gold prices has actually dropped in recent weeks as investors have covered losses and many feel that demand for gold will decrease as we may go into recession. Industrial use of gold is still a big gold user, e.g. gold plated electronics connectors, etc.
In recent weeks, investors big and small have been liquidating gold to cover losses on Wall street, here’s an article on this.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ajSEk5FMPqqM
ETFs have made gold an even more liquid asset, more on this on article on “The Street” on how gold has become more correlated with the market in recent years.
Hope this helps,
BubblesitterParticipantConsumer sentiment is now starting to erode per today’s consumer confidence numbers. The reverse wealth effect may be starting to take hold. People now feel less wealthy, and will spend less.
Consumer spending accounts for >75%+ of economy. A drop in this will lead us rapidly to recession. I hope I am wrong.
Participant2 videos on bloomberg on how these housing numbers are essentially worthless.
Kasriel of Northern Trust “skeptical” of new-home sales data.
And Brusuelas video
Participant2 videos on bloomberg on how these housing numbers are essentially worthless.
Kasriel of Northern Trust “skeptical” of new-home sales data.
And Brusuelas video
-
AuthorPosts