SIVs,CDO,CMOs and other Toxic PaperWhat is in your wallet? We all have heard this commercial repeatedly. I undergo a better challenge that has more of an effect on your personal wealth. What is in your bank’s money merchandise or your mutual funds cash equivalent fund? Do you undergo any idea? How about. Do they?My wife so adequately calls me obsessive compulsive paranoid. In all honesty these days with all the financial surprises and breathe out ups from Northern move back and forth or E*TRADE maybe one needs to be. I want to overlap with you a story that transpired yesterday. One of my tenets in life is always surround yourself with the smartest people you can. Approx 7 years ago I became interested in another asset categorise to invest in undervalued commercial real estate. One of my largest clients (and richest) has been involved for years and is exceptionally brilliant. We did townhouse projects store complexes and land in the play capital of Tennessee Fairfield Glade. Through these efforts we accumulated substantial profits and would leave the money on deposit with a major bank in one of their change equivalent funds. In all honesty never really gave any thought to how the cash could slightly outperform short term US treasuries and the like. We were under the impression that this money was in VERY SAFE bunco term govt paper. I asked my colleague and he thought that the banks paid a brush aside premium in request to keep accounts and potentially furnish other products. OK bring together say… but due to my paranoia… I wanted to know exactly what the underlying items were. I received the breakdown and on the top of the 8 page list of items was the call WORLD categorise INVESTMENT MANAGER. Then surprise set in. One of the first items was Asset backed securities of 3 items of car loans totaling 83 million dollars. Then Retail Finance almost 500 million dollars ( hold on credit cards?) . This sell Finance was comprised of items that sure were not short term government bonds that is for sure. Ok next item was CDs... Ok some relief and ok some were European banks. The next item made me sick. Collateralized give Agreements. So they bought packages of loans.. and now I was one of the lucky investors. Great seems very similar to Collateralized mortgages and to make it in better only $3.5 Billion dollars of these were to some the news making brokerage firms that are writing off billions of dollars as if they are dollar bills. Next item was some variable notes and some corporate notes. The shocker was; the underlying of these notes was surely credit worthy entities such as an office park in Alabama a country club in Bethesda and Callaway tend Resort. I discussed this with my colleague and we immediately sold off our money finance being managed by our WORLD categorise INVESTMENT MANAGER and purchased short call US Treasuries registered in our company’s label. What is in your Money Market or Cash Equivalent finance? I would suggest you immediately analyse it out. I do not think you would want to rest in lie like all of these populate who did at Northern move back and forth Bank in England. Andrew Abrahamhttp://capitalinvestor1836 blogspot com/
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Related article:
http://capitalinvestor1836.blogspot.com/2007/11/sivscdocmos-and-other-toxic-paper.html
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