Weekend reading and resources

2010-01-10

More Mortgage Meltdown: 6 Ways to Profit in These Bad Times: Tilson does a great job in this two-part book to first help make sense of what happened and how, but also goes a step further by detailing six trades to profit during the crisis. The background information is very elaborate and Tilson makes good use of data, charts, and anecdotes to colorfully present what led to the crisis. The trades that Tilson presents are case studies illustrating how he tried to profit from the crisis, but they are not necessarily suitable currently for investors. The companies analyzed are: Berkshire Hathaway (its derivatives exposures were misunderstood and investors sold it off), American Express (a high quality name with a spend-centric business model that is different than the traditional credit card companies’ model), Resource America (a financial microcap with significant exposures but also very substantial upside), Long Beach mortgage (a residential mortgage-backed security reflecting a mezzanine interest in a pool of loans) on the long side, and shorts on MBIA (an insurer of residential structured notes with inadequate reserves) and Wells Fargo (a bank that took on a large portfolio of pick-a-pay or option-adjustable rate mortgages with the acquisition of Wachovia).

Federal Reserve – Consumer Credit statistical report: released around the 5th business day of the month and covers consumer credit outstanding for the prior month.  Consumer credit decreased at the most rapid pace since it started being recorded in 1943.

Historical perspective: YouTube compilation of videos from January 2009 (click the left-right arrows to navigate through the playlist or view the list on YouTube by clicking here):

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