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Strategies & Market Trends : SiliconInvestor All Stars Forum
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To: Dale Baker who wrote (1119)8/1/2007 2:17:48 PM
From: SouthFloridaGuyRead Replies (1) of 1718
 
The problem is that these quant jocks are so enamored in their models, they lose sight of the bigger picture. Just because it's "A" rated paper trading 100 bp higher, doesn't mean there is "value".

It's all about the collateral. And housing collateral is sh!t.

In all these instruments in the past, present and future, nobody ever analyzes the collateral properly.

The question is what is the collateral on the corporate debt side? There is a lot of sh!t there too, but it's not as bad as the housing debt, IMO.

So it would take a really nasty global recession to cause the same longer run panic in CLO's as you have seen in CDO's. Right now a nasty global recession is years off, IMO, because it's still early from a cycle perspective...borrowers are flush with cash, the problems will come a few years down the road when those who need to can't go back to the pond.
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