4 ms·

Since the signal was giant, I take it you made a lot of money by betting against it?

pjmorris 10y ago
Some. Not like Michael Burry. Starting with seeing what was going on in my South Florida neighborhood, and seeing Robert Schiller's graph of house prices vs. income in the NYT in 2005, I did a bunch of research, leading to selling one house in 2005, and another in 2007. I made money on both. Those buyers each later lost money when they sold the houses. On balance, I made some money, and lost a lifestyle. I don't think of myself as a winner there. There was plenty of signal. Given the havoc caused in so many people's lives across the world, and given the documentation now available, I don't think 'No one could have seen it coming' is a reasonable way to think about what happened.
- davidivadavid 10y ago
  Hindsight is 20/20. From what I can tell, the Case-Schiller index is back around 2005 levels, even higher in some cities like LA. [1] Should people start selling their houses? [1] https://en.wikipedia.org/wiki/File:Case_Shiller_indice_20_villes.jpg https://en.wikipedia.org/wiki/File:Case_Shiller_indice_20_vi...
  - pjmorris 10y ago
    Could you point out the hindsight? What's different since 2005, in my perspective, it that it is now clear that there has been no political will to let bad loans go bad (evidenced by the government's responses since 2009). If you expect that to remain the case, it makes sense to not sell. If you expect that to change, and that house prices should go back to their historical income ratios, then it makes sense to sell.
    - davidivadavid 10y ago
      It's always easy to retrofit what can essentially be a lucky guess into a smart prediction after the fact. Whether you consider that guess to fit a plausible narrative doesn't always make it any less of a guess. http://econlog.econlib.org/archives/2014/09/predicting_bubb.html http://econlog.econlib.org/archives/2014/09/predicting_bubb....
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      - pjmorris 10y ago
        Fair enough. Maybe a personal anecdote about how a non-economist could find a housing crash plausible isn't the best evidence for the availability of signals that something was wrong with the housing market. I can go through the FCIC report [0] and annotate to demonstrate, but their conclusion was the crash was avoidable. I can pile on more sources if that's desired. It'd be more entertaining to watch 'What I Learned and (Un-Learned) at the Financial Crisis' by Mark Blyth. I object to Sumner's choice of time points in his blog, as they leave out the peak, and the historical norm. To observe that an already abnormal market is only a little bit more abnormal after ten years serves his point, but misses the story. That might be my meta-critique of economics. [0] http://fcic.law.stanford.edu/ http://fcic.law.stanford.edu/ [1] https://www.youtube.com/watch?v=lhldDOp77QA https://www.youtube.com/watch?v=lhldDOp77QA

Some. Not like Michael Burry. Starting with seeing what was going on in my South Florida neighborhood, and seeing Robert Schiller's graph of house prices vs. income in the NYT in 2005, I did a bunch of research, leading to selling one house in 2005, and another in 2007. I made money on both. Those buyers each later lost money when they sold the houses. On balance, I made some money, and lost a lifestyle. I don't think of myself as a winner there. There was plenty of signal. Given the havoc caused in so many people's lives across the world, and given the documentation now available, I don't think 'No one could have seen it coming' is a reasonable way to think about what happened.

davidivadavid 10y ago
Hindsight is 20/20. From what I can tell, the Case-Schiller index is back around 2005 levels, even higher in some cities like LA. [1] Should people start selling their houses? [1] https://en.wikipedia.org/wiki/File:Case_Shiller_indice_20_villes.jpg https://en.wikipedia.org/wiki/File:Case_Shiller_indice_20_vi...
- pjmorris 10y ago
  Could you point out the hindsight? What's different since 2005, in my perspective, it that it is now clear that there has been no political will to let bad loans go bad (evidenced by the government's responses since 2009). If you expect that to remain the case, it makes sense to not sell. If you expect that to change, and that house prices should go back to their historical income ratios, then it makes sense to sell.
  - davidivadavid 10y ago
    It's always easy to retrofit what can essentially be a lucky guess into a smart prediction after the fact. Whether you consider that guess to fit a plausible narrative doesn't always make it any less of a guess. http://econlog.econlib.org/archives/2014/09/predicting_bubb.html http://econlog.econlib.org/archives/2014/09/predicting_bubb....
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    - pjmorris 10y ago
      Fair enough. Maybe a personal anecdote about how a non-economist could find a housing crash plausible isn't the best evidence for the availability of signals that something was wrong with the housing market. I can go through the FCIC report [0] and annotate to demonstrate, but their conclusion was the crash was avoidable. I can pile on more sources if that's desired. It'd be more entertaining to watch 'What I Learned and (Un-Learned) at the Financial Crisis' by Mark Blyth. I object to Sumner's choice of time points in his blog, as they leave out the peak, and the historical norm. To observe that an already abnormal market is only a little bit more abnormal after ten years serves his point, but misses the story. That might be my meta-critique of economics. [0] http://fcic.law.stanford.edu/ http://fcic.law.stanford.edu/ [1] https://www.youtube.com/watch?v=lhldDOp77QA https://www.youtube.com/watch?v=lhldDOp77QA