"Uncle_vito" <uncle_vito2002@[EMAIL PROTECTED]
> skrev i en meddelelse
news:s_idnQuHVa7mXU_anZ2dnUVZ_sKqnZ2d@[EMAIL PROTECTED]
> So how are investors supposed to know which companies use leverage and
> which
> do not. Typically companies that use leverage have higher returns. So
am
> I
> supposed to invest for lower returns on the assumption that these
> companies
> do not use leverage and my money is therefore safer?
>
> This whole market is a giant crapshoot. Where am I supposed to put my
> extra
> money?
Gold, Commodities, Euro - in that order.
Then wait until the long bonds are well into double-digit yields and buy
some of those. At some point we will get the "stocks are over forever"
articles and then it is time to invest in stocks again.
The grit in the works is that Pakistan and Egypt I.M.O. are hitting Peak
Food these days so trouble is brewing for real in the middle east as in:
topping of governments, civil war and no supply routes for troops in
Afghanistan and Iraq!
> Vito
>
>
> "Papadillos" <papadillos@[EMAIL PROTECTED]
> wrote in message
> news:C3F7E60C.584B%papadillos@[EMAIL PROTECTED]
>> Financial Times (Blogs)
>> John Gapper
>> March 7, 2008
>>
>> Carlyle Capital and the failure of memory
>>
>> Opinions vary on whether, when the financial system eventually recovers
>> from
>> the credit crisis, which it does not look like doing any time soon,
>> things
>> will work differently in future.
>>
>> Some argue that the shock caused by over-complexity in the credit
market
>> is
>> so great that investors will pull back permanently from putting money
in
>> collateralised debt obligations and the like.
>>
>> Instead, there will be a long-term swing towards 3re-intermediation2 -
>> banks
>> providing credit directly from their balance sheets rather than acting
as
>> intermediaries that transfer that risk to investors by selling them
>> sophisticated securities.
>>
>> Personally, I do not believe it and Exhibit A for my scepticism is
>> Carlyle
>> Capital, which has got itself into trouble by leveraging its equity 28
>> times
>> to buy supposedly impeccably safe AAA-rated mortgage-backed securities.
>>
>> This is the same trap that befell Long-Term Capital Management only 10
>> years
>> ago - it employed leverage of nearly 40 times its equity to arbitrage
>> tiny
>> differences in bond prices. When markets became volatile, small
movements
>> in
>> the prices of those securities brought the fund down because they were
>> heavily magnified by leverage.
>>
>> After Long-Term Capital, there was a lot of talk about how hedge funds
>> would
>> avoid such high levels of leverage again. But Carlyle Capital has been
>> caught out by doing the same thing again.
>>
>> The broader point is that financial markets have a tendency to repeat
the
>> cycle of greed, during which competition reduces yields and forces
banks
>> and
>> funds use more leverage and complexity to make profits, followed by
fear.
>>
>> During times of fear, everyone regrets what has happened and says it
will
>> not happen again. But Carlyle Capital shows that mistakes repeat
>> themselves,
>> after an time long enough for jobs to change hands and investors to
>> forget.
>>
>> http://blogs.ft.com/gapperblog/
>>
>>
>
>
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>
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