Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: shades who wrote (62353)	4/21/2005 1:34:17 AM
From: energyplay	Respond to of 74559

Worthless debt - One big change in the past 5 years or so has been the creation of the credit default market. Something like re-insurance, you can lay off your risk for a fee, and you can buy risk to get higher returns. So credit card company 1 might keep it's pretty good credits. Credit card company 2 has your friend and everyone who watches the Jerry Springer show. Aware of the risk, they do default swaps with a consortium of banks. Brown material hits the fan, and the risky guys at 2 look great, the guys at 1 look lousy, then get bought by 2...at 50% on the dollar. Your short on 2 doesn't work to well. **** The above was what I did in 2001, with Capital One, MBNA, and Household credit.....except I also had shorts and puts on Providian PVN, which blew up big time, so I made some money on the whole group. Risk management has come a LONG way. **** There is a bank index, BKX, and a regional bank index/ETF. There's a broker dealer index also.