Is the falling housing market problem spilling over to the investment market?
*Financial Times, July 18, 2007:
"Bear Stearns on Tuesday told investors in two stricken hedge funds
managed by the bank that one fund had lost all its value and the other
had about nine cents remaining for every dollar invested following bad
bets on the US subprime mortgage market.
The losses, especially for the less leveraged of the two funds, were
worse than investors expected.
“They are a big investment house. They are supposed to be
professional,” said one fund of funds executive. “There is nothing to
do now except maybe go shoot the guy who did it.”
Bear Stearns declined to comment. The two funds at one point had more
than $20bn in investments, much of it using borrowed money.
The funds were heavily exposed to the troubled subprime mortgage market
through complex debt securities known as collateralised debt
obligations (CDOs). Amid a sharp increase in late payments and defaults
on subprime home loans – made to borrowers with patchy credit histories
– the funds ran aground as creditors made margin calls."
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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