[waterlesscloud]

Sorry, but I'm not going to show any respect for an industry that drove off a very predictable cliff, and what's worse is still in denial about their losses.

Call me once they accept that they made millions of loans they shouldn't have made and accept that the losses are as much theirs as the homeowners.

And when they follow their own damn procedures, which they're still showing no sign of doing.

Then we'll see about some respect.

[MichaelApproved]

If it was so predictable then why didn't you short the market and make millions while they were headed for the cliff?

Anyone who claims this was very predictable and didn't make a bet is full of it.

[idiopathic]

That's a good point, but for me at the time, I did not know how to short. All I knew was that I should save a third of my paycheque so that, when the crash comes, I have money with which to buy a house at a much cheaper price. (By the time the crash came, I sunk all my savings into my start-up, but that's another story.) At the time, this everyone else thought this was madness because money had to go on a mortgage now, before prices rise yet again.

So my error was not that I was full of it, just that I lacked the financial knowledge to maximize the benefit of the money that I had used to support my bet.

[MichaelApproved]

There are many brokers that will show you what you need to if you want to bet the economy is about to go bust. You can short, buy options, buy bonds, etc. If you truly thought it was very predictable then it wouldnt have been difficult to get those money hungry bankers to show you what to do. They'd even teach you how to bet their own bank would go under.

[borism]

I'm glad you didn't fall into the short selling trap.

It's not about predictability, it's about timing!

Pretty much everyone except Wall Street and Washington knew by the middle of 2008 that bubble is about to burst. Of course very few if anyone predicted when exactly and to what extent it was going to happen. I got burned by mistiming my short and underestimating how devastating the crash will be.

[MichaelApproved]

I love this one too "pretty much everyone knew"

Think about what you're actually saying here. If pretty much everyone knew then 401k account holders would've hedged their bets or moved into safer places. Instead they took a bath with the rest of the economy.

Your 20/20 hindsight vision is amazing. I can't wait for you to tell me who will win the 2008 superbowl.

[borism]

knowing something doesn't mean it's immediately actable upon.

I stand by my claim that pretty much everyone knew by the end of summer of 2008 that bubble was deflating.

Hedging can turn on yourself. Southwest was very successful at hedging rising oil prices until they weren't rising anymore, then their hedges almost bankrupted them.

[panarky]

Keynes said, "Markets can remain irrational longer than you can remain solvent."

Many people saw the dislocations in the market long before the crash, but would have gone bankrupt shorting that irrationality.

It's just damn hard to get the timing right.

[klenwell]

In 2005, after seeing this map in the NY Times, I tried to figure out a way and asked everyone I knew:

http://graphics8.nytimes.com/images/2005/06/15/business/arm3...

My excuse was: it wasn't clear how to, there's always a timing issue (it's not necessarily enough to know it's inevitable, you gotta know when), and it's hard when you don't have a lot of other people's money to play with.

The answer to how it was done is in Michael Lewis's book, The Big Short. After learning how that guy did it, I don't feel so bad for not figuring it out.

[prodigal_erik]

"Markets can remain irrational a lot longer than you and I can remain solvent." Seeing a company get itself into severe trouble doesn't guarantee any particular effect on its share price, because the only connection between the two is investors' faith that some connection ought to exist. Shorts are betting not only when the price will drop but that no manipulation will occur at that time, and when a company is "too big to fail" and will attract government intervention it's exceptionally risky.

[MichaelApproved]

Very good point. You also may not have had the means to do it even if you had the knowledge. But how about at least show a post from 2007 or before that confirms you knew these clearly predictable events would happen.

My frustration is with someone claiming that they knew or that it was very predictable when they were simply WORRIED it would happen. Many of us worry about a lot of things. That doesn't mean when something finally goes wrong we get to say "see? I knew it would happen."

[Klinky]

You need to stop ignoring the massive amount of lies and fraud that was going on. Entire companies knew they were dealing with fraudulent/extremely risky transactions, yet no one wanted to be the one that stopped the buck. Not even ratings agencies, who's job it was to oversee the quality of these investments piped up when they knew that what they were rating as AAA was really garbage.

One example:

http://www.businessinsider.com/embarrassing-wall-street-emai...

That was about a 1.5 years before the $%$% really hit the fan. There are other e-mails floating around with investment brokers gloating about selling off "pieces of $%$@" to people. They knew what they were doing & profited handsomely from it, they have yet to really pay any price for it.

[MichaelApproved]

Where have i ignored that? It's not even part of this discussion.

I'm simply saying the original poster didn't know what he claims to have known. It's hindsight nonsense.

[Klinky]

You're claiming it wasn't "predictable", it was indeed predictable. Perhaps not on "main street", but the perpetrators(large chunk of wall street) knew what they were doing and didn't speak up about it because they were too busy profiting from it.

[CoachRufus87]

Not everyone clammers to profit off of the collapse of a financial system.

[MichaelApproved]

I always found the "I don't want to profit from this" kind of cheap and rarely true. I don't see the moral problem with profiting off of banks over lending and making risky bets. If you do have a moral problem with this then you can setup a charity with proceeds going to a worthy cause.

Or do you also have a problem with giving money to the needy?

[wazoox]

I've read a complete book in 2006 that predicted it all from a well known Banque de France economist. It seems that those worth their salt predicted it, but nobody was interested in hearing it coming.

[thematt]

The tech industry drove itself off a very predictable cliff at one point as well, do you have respect for it?

[fanf2]

Wasn't that the financial industry again? VCs and IPO backers and share prices?