I once saw this graph before in early 2007 when Bear Stearns got into the first signs of trouble. Despite the recent massive rally in asset prices ever since the lows of March, the thought that a comparable second wave might come is just too much to stomach. That is why I have yet to buy into this rally. Perhaps the situation has changed and this graph is no longer valid. Maybe through loan modifications the impact might not be as great as imagined. It is also possible that the market might have already taken this into account. However, this graph has proven its mettle once and I'm not about to bet against it a second time.
Saturday, August 15, 2009
Option ARM: The second wave of this crisis or just fear-mongering?
I once saw this graph before in early 2007 when Bear Stearns got into the first signs of trouble. Despite the recent massive rally in asset prices ever since the lows of March, the thought that a comparable second wave might come is just too much to stomach. That is why I have yet to buy into this rally. Perhaps the situation has changed and this graph is no longer valid. Maybe through loan modifications the impact might not be as great as imagined. It is also possible that the market might have already taken this into account. However, this graph has proven its mettle once and I'm not about to bet against it a second time.
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