Thursday, April 23, 2009

Good Time to Invest for Long Term Portfolios

IMF forecasts the worst year post world war II will be 2009. Persons with savings can acquire equity share portfolios at probably less than fair values in this year.

Why so?

Because securities market intermediaries have suffered enough losses and do not have the means to acquire the securities at fair values. These intermediaries who used to buy first in both primary and secondary capital markets and then later on distribute to genuine buyers have no capacity now. The systems are broken in the markets. There is a big doubt in everybody's mind about the future. People do not park their money in assets. It is better to be in bank cash rather than to be securities.

That gives the opportunity to people with genuine savings to acquire some assets at less than their fair values. But the volatility in markets will be there and strain you. Benjamin Graham, the most conservative value proponent said after you buy, the market may go down by 50%. Can you still believe your value calculations?

William K. Black's Article on Mortgage Fraud

William K. Black is Assoc. Professor, Univ. of Missouri, Kansas City;
He was a Senior regulator during S&L debacle

His article "The Two Documents Everyone Should Read to Better Understand the Crisis" dated 23.4.2009 is an interesting read.

He began his article with the statement "As a white-collar criminologist and former financial regulator much of my research studies what causes financial markets to become profoundly dysfunctional."

The two documents that he is referring to are


Both these documents talk of possible risks and problems in mortgage investing.