Clusterstock  Sep 22  Comment 
Please enable Javascript to watch this video   The movie trailer for the "The Big Short," the film based on Michael Lewis' best-selling book that chronicles a group of outsiders who nailed the subprime housing crisis, just dropped.  The...
MarketWatch  Sep 21  Comment 
The number of first mortgages extended to subprime borrowers was up 30.5% in the first five months of 2015, according to data from consumer-credit agency Equifax . At the same time, the number of home equity loans to subprime borrowers climbed...
MarketWatch  Sep 11  Comment 
Borrowers who took out student loans to attend for-profit schools defaulted at the same or higher rate within five years as those with subprime mortgages.
Financial Times  Sep 7  Comment 
Yield-hungry investors ready to endorse ‘non-prime’ lending
Clusterstock  Aug 24  Comment 
Billionaire entrepreneur Elon Musk has loaded up SolarCity shares, just days after famed short-seller Jim Chanos disclosed he is shorting the stock. Musk, the company's chairman, spent $5 million on 123,519 shares of SolarCity at around $40.48...
Clusterstock  Aug 21  Comment 
Famed short-seller Jim Chanos is betting against SolarCity, the solar power company cofounded by Elon Musk. The founder of Kynikos Associates revealed on CNBC's "Halftime Report" that he thinks SolarCity's business model is similar to...
Wall Street Journal  Aug 11  Comment 
Fortress Investment’s Wesley Edens turns $124 million into $3.5 billion. “It’s not a bad thing.”
Wall Street Journal  Aug 11  Comment 
Reuters  Aug 6  Comment 
** Subprime lender's shares down as much as 7.8 pct to $47.16; biggest ever one-day percentage fall


What happened blaicasly was because of assuming that a trend was permanent. In the financial world, this is a form of mental disorder. Trends are why anyone could be a day-trader and make money, for a while. Their impermanence is why anyone that didn't get out of that in time lost their shirts. The subprime loans were designed to churn the loans. You had loans that were fixed for usually two years, then would become variable. The whole intent was for the borrower to refinance in two years, again generating all of the bank's new-loan fees. The trend for real estate to appreciate rapidly was counted on to continue to keep this attractive for the borrower. Borrow 100 with 5k in costs to pay off a loan of 95, wait two years, borrow 105k with 5k in costs to pay off a loan of 100, wait two years, borrow 110k with 5k in costs to pay off a loan of 105 but then the trend didn't cooperate by giving a home value of 110k, and the balloon broke. People still had the same house they did, but now a loan for more than they originally paid for it, and they can't get refinancing, and can't sell it for what they owe. Trends are temporary. People that think otherwise will eventually lose money. Now, how do you know when a trend is coming to an end? There's a story about the Crash of '29 about a broker who was getting a shoe shine, and the shoe shiner gave him a hot tip on a stock. He realized that when shoe shine boys were giving stock tips, the market was about to crash and he got out. During the day-trader era, there were stories about bus drivers and janitors making huge money in day-trading, just before that went south. How many times have YOU seen people offering to help people get loans in their answers right here on Yahoo, offers totally unconnected to the question being asked? It was a trend. Now it's not.

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