How to invest in the housing market. Really.
Greg Lippmann, made a star by author Michael Lewis in The Big Short, for making millions on the housing collapse, is now taking the other side of the bet and buying mortgage backed securities. It seems foolish on the surface, but it's actually a shrewd investing opportunity.
Greg Lippmann, made a star by author Michael Lewis in The Big Short, for making millions on the housing collapse, is now taking the other side of the bet and buying mortgage backed securities. It seems foolish on the surface, but it's actually a shrewd investing opportunity.
The New York Times reports that Greg Lippmann, made a star by author Michael Lewis in The Big Short, for making millions on the housing collapse, is now taking the other side of the bet and buying mortgage backed securities.
On the surface one wonders what he鈥檚 thinking. As Azam Ahmed writes,
However, JPALT 2006-S1 1A11 is trading for 70 cents on the dollar, making the security a compelling buy. An investor can still make more than 5.4 percent even if defaults increase, according to Ahmed. And even a slight improvement in the default rate would send returns as high as 8.7 percent.
鈥淧rice is a wonderful thing,鈥� said Chris Flanagan, an analyst with Bank of America Merrill Lynch. What was 鈥渢oxic鈥� at 100 cents on the dollar is compelling at 70 cents.
When prices are allowed to adjust, markets clear. Imagine, if wages were allowed to fall or banks and the GSEs were allowed to fail.