Subprime Insight

I’ve said it before, I’ll say it again: I started this blog to, one, inform the public of the terrible economic crisis that is coming and, two, to make money. If anyone has been following my portfolio, they will see that I have changed the positions a substantial amount. This is because as the days pass by, I learn more about the market. I’ll be posting the to-date returns and yearly adjusted rates regularly. The yearly adjusted rates, which will be very high, will be presented just to make fun of the market. The yearly adjusted rates are completely fictional. Disclaimer: I do not work on Wall Street, I am not a CFA and I plan to invest in some of these investments. This is just my subprime insight.

Here is the performance of the portfolio on Friday, February 29th 2008 after two days of entering into the positions:

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I proposed a portfolio last week made to profit not necessary from the collapse of the market but the long opportunities that will arise from the rubble of the mayhem. I’ll be tracking the portfolio using www.theupdown.com on the Subprime Insight group. I heard about the site from a friend of mine working for them and currently attending Harvard. The site is an interesting private equity project that gives individual virtual investors real money for out performing the market. I began the portfolio by placing market orders at the start of trading on Thursday. After the massacre on Friday, the portfolio has held its own with a 0.40% gain, or 73% annualized. That was the stress test, next week will be the profit opportunity. Disclaimer: I do not work in the financial services industry, I am not a CFA and I plan to invest in some of these investments. This is just my subprime insight.

The weighting last week:

Main Plays (75%):

• GLD (20%)
• DBA (20%)
• FXY (15%)
• RJI (10%)
• TLT (10%)

Supporting (25%):

• SLV (10%)
• FXE (5%)
• SHY (5%)
• TSCM (5%)

However, since then I have found some interesting new plays. So I’ll be placing new trades come Monday. I’ve also decided to step up the risk. I love risk. Here is the new portfolio:

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Last week I posted two predictions for the week. My predictions had an amazing 0% success rate. We’ll review the evidence I had for the predictions I made and make revised ones for the coming week.

Predicted Last Week:

• WRONG: Stocks will trade lower this week as February put options expired last Friday (We are in a C Wave, also).
  • I argued this after noticing C had major resistance at 25.oo on Friday. Surely preventing options from entering into the money most have been affecting other stocks. With a large interest gone in sustaining prices above 25.00 at C, I thought that would hold the same for other Dow stocks. Sure enough, C finally did break through the 25.00 barrier but only to be brought back up by the Dow’s miraculous 200 point gain on Friday at 3:15.
• WRONG: Bond insurers will be split.
  • I was just going after what Spitzer said at the end of last week. He said bond insurers needed to finalize on a bail out plan within the coming days. He outlined a couple of alternatives. Surprisingly, the same news a week later before the market closed was good enough for a 200 point gain. This after Reuters reported that MBIA’s re-insurer had its rating cut.

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When I first saw this I was amazed. Some flippers are down 40% on $1,000,000 investments. I’ll definitely be checking this site to check up on the situation.
http://flippersintrouble.blogspot.com/

If you haven’t seen this, you should. It explains the Subprime Crisis in 15 minutes. That leaves you plenty of time to learn about the other problems.

CBS House of Cards:
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Although the article is long, if you stick with it there is an interesting surprise at the end. This article has been slightly edited for illustrative purposes.

An Article on Real Estate Speculation

A wise prophet observed many years ago that “when the blind lead the blind, both fall into the ditch” - a maxim which accurately describes our situation in both business and government today. In this respect the real estate field is no exception, unless it be in the extent of its mishaps and the number of people affected by them. It behooves us, therefore, to give some serious thought to the manner in which we have arrived in our present unhappy situation.

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