Wall Street and where your money went

[95CobraR]

Originally Posted by 427sharpe

I think the largest mistake was Congress legislating lending policy.

I agree.

Originally Posted by Wayne Maybury

No but from what I understand, they sure as hell misrepresented what it was that they were selling. They took junk, rolled it in, and packaged it as AAA.

Wayne,
I was once an "institutional investor". I am now retired and only manage personal funds.

The SEC (a government entity) registered 3 or 4 firms to rate bonds and other securities. It is just plain wrong to follow them. A RIA firm (which I owned) must do their own due diligence for clients that were counting on me.

We never trusted them. We knew the old saying: "Bulls and Bears Make Money; Pigs Get Slaughtered".

I studied these CDOs. CMEs, and all the other products. Some even had a squared product which leveraged the product with short term debt. I was confused so I hired a recent Wharton grad just to help me (an old MBA).

Then in early 2009, Warren Buffett in his letter to 2008 shareholders shareholders stated: "In poker terms, the Treasury and the Fed have gone 'all in'. Economic medicine that was previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome afftereffects".

We had already sold this crap. Then we shorted it.

I don't have to work anymore. A guy has to do the homework.

Yet, Buffett sold bonds, yesterday, at only a 0.02 to 0.43 premium to the London interbank rate. It was the 15th largest offering in history. It just follows the recent inflows of bond buying in the last year.

Someone, with proper homework, will profit from this (or just follow the Wall Street banks). Or trust Congress and the SEC to be your savior.