March 15th, 2009
Stuck with day-to-day fire fighting, I finally got around to read the excellent article by Michael Lewis.
It is a wonderful article of how the whole financial sector breakdown, to the world we have today, in simple terms of how CDO and CDS adds to the mess we are in. (I understand CDO, but I never fully grasp the implication of CDS until I read this article)
Actually, I was made aware of something called “sub-prime problem” in US in late 2006 by a very smart investor I worked with. He told it is going to be the biggest problem the world going to face and for the life of me, I couldn’t figure out how a lending problem in US could lead to a worldwide breakdown. I also remember sitting down with some analysts over lunch in mid 2007 trying to make sense of this subprime thing, and we never got it except to get out of the market.
I remember asking “If something going to crash, then someone somewhere going to made money”. I don’t know how back then and wasn’t smart enough to figure it out. I didn’t bother to dig further either (not my field anyway).
But it all make sense now and I wish I did ask a lot more questions then.
[I wrote the following and then deleted it, and then wth, I am not giving out anything that is important anyway]
While I lost money in the crisis, I am a little proud I wrote the following in 15th Aug 2007 for an investment report I made for my investor.
“The other risk is timing of the IPO. Many market analysts believe that the US market has being growing for too long and the housing loans problem will bring a major correction to the US market within this year. We must be prepared that the (COMPANY) may not be able to go IPO in 2008 as planned.”