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>Cut to 2008, when Goldman made money off the economic collapse by shorting the housing market. The firm was charged with fraud in 2010. First of all, that's n
by gragas 10y ago
>Cut to 2008, when Goldman made money off the economic collapse by shorting the housing market. The firm was charged with fraud in 2010.
First of all, that's non-sequitur. Second, why is it evil to short the housing market?
Washington Post really knows how to cater to its readership...
- forgetsusername 10y ago>Second, why is it evil to short the housing market? People don't understand the basic concept that in order to buy something, someone needs to sell something...which is going short.
- AnimalMuppet 10y agoNo. It's only going short when you sell something that you don't have - that is, you sell something borrowed. It's not clear to me how one would do that with houses. You could short homebuilders and mortgage companies, but that's about all.
- andrevvo 10y agoMortgage payments are bundled into securities called RMBS. By shorting these securities, you are not shorting the mortgage company, but the assets themselves (the mortgage receivables).
- AnimalMuppet 10y agoCan you short those?
- andrevvo 10y agoYup, best way to think about them are as bonds in which the credit rating is determined by the underlying asset quality rather than the company itself.
- AnimalMuppet 10y agoTIL.
- andrevvo 10y agoThis is completely misguided as AnimalMuppet pointed out. The following is a decent article explaining how shorting works: http://www.investopedia.com/university/shortselling/shortselling1.asp http://www.investopedia.com/university/shortselling/shortsel...
- deleted 10y ago[deleted]