4 ms·
>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.
by 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...