Prices do not reflect market value—why Warren has made so much money.
(Originally published on Amanda Stanhaus’s financial literacy vocab blog: XO, Bettie Vocab.)
Clueless about why 2008 made the rich and poor, poor alike? Click on the bold words to learn their meaning (or better yet, here is a list) and then repeat after me…
The buy side thought mortgages made invincible asset backed securities. Mortgages were not created equally; they were not commodities. The bull market, lack of due diligence and aggressive investment style [eye-roll, mutter “Goldman”] clouded almost everyone’s view. Plus, lots of leverage with lack of worry about liability. The worst was the derivatives to cover the company’s, but not their client’s, asses. I mean assets….
Once the bear market began, boy did it roar with cyclical and defensive stocks alike taking a tumble. Default there. Bankruptcy here. Magnified by balance sheets that were not diversified.
If only I had used my spare time for technical analysis of leading indicators, benchmarks, bond ratings, decided to be contrarian and short sell REITs my retirement would have come early!
Now, with the market obviously inefficient, fundamental analysis will help me pick the winners, just like Warren!
(Originally published on Amanda Stanhaus’s financial literacy blog: XO, Bettie.)
This is an inefficient market. This company’s stock is worth much more than it’s current stock price. Buy!! Quality, ladies!
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