December 18, 2007
Where Hedge Fund Guys Get Their Best Investment Ideas
Subprime Securities Market Began as `Group of 5′ Over (non-Kosher) Chinese
“The ABX-HE index started trading on Jan. 19, 2006. At 8 a.m. on the first day, John Kane of Sorin Capital started phoning dealers. Kane, then 27, was a trader at Sorin, which runs hedge funds that invest in mortgages and other securities.
His auto mechanic, in describing the debt burden he was carrying to own a home, had planted the idea in Kane’s mind that the housing market might be in trouble. Kane thought it through, ran an analysis on available data, and decided to wager against, or ’short,’ subprime. To do that, he turned to the portion of the ABX index dealing with the lowest investment-grade subprime securities.”
For some inexplicable reason I’m reminded of the scene in The Big Lebowski where Tony (the driver) talks with the Dude:
The Dude sits in the back of a limo holding a White Russian, listening to the chauffeur, a man of about the same age from whose livery cap a ponytail emerges.
DRIVER
–So he says, “My son can’t hold a job, my daughter’s married to a f*ckin’ loser, and I got a rash on my ass so bad I can’t hardly siddown. But you know me. I can’t complain.”THROUGH RASPING LAUGHTER:
DUDE
F*ckin’ A, man. I got a rash. F*ckin’ A, man. I gotta tell ya Tony.He takes a sip of a freshly-mixed White Russian, which leaves milk on his mustache.
I was feeling really sh*tty earlier in the day, I’d lost a little money, I was down in the dumps.
TONY
Aw, forget about it.DUDE
Yeah, man! F*ck it! I can’t be worrying about that sh*t. Life goes on!
December 18th, 2007 at 12:28 pm
I just popped in to post a link to this very article. One my favorite line s was: “Until recently, early repayment was perceived as the biggest risk faced by Wall Street’s mortgage desks.”
Why oh why do bankers insist on finding new ways of losing money when the old ways are working just fine?
Love your Lebowski quotes. Also, right after that, as he’s getting dragged to the limo, “hey man, there’s a BEVERAGE here!”
Especially love the Planned Parenthood ad! My new motto.
Good luck and good trading. It looks like you are doing well!
December 18th, 2007 at 3:00 pm
CapGain: I can just see some hedge fund guy scratching his chin while listening to Tony the limo driver complaining about his mortgage, among other things:
“My home loan reset, my son can’t hold a job, my daughter’s married to a f*ckin’ loser, and I got a rash on my ass so bad I can’t hardly siddown. But you know me. I can’t complain.”
Ding! The lightbulb goes on.
Yes, I’ve often repeated the “hey man, there’s a beverage here” line when jostled in bars … my favorite line was about the complaints that the Chinese food wasn’t kosher (oy!).
I am not doing well: I’m giving away all my brilliant ideas for nuttin, as usual. :-)