T-minus ? until Countrywide goes under.. . .

NEW -> Contingent Buyer Assistance Program
<p><em>"I'm sure Buffett would be interested in some of Countrywide's assets." and "Buffett knows the vast majority of prime mortgage paper is free from the subprime morass"</em></p>

<p>marty - really? You are sure, and he knows? Are you a close friend or just a business associate with whom he confides? And since you are so sure on these issues, are you putting your money where your mouth is? Are you buying Countrywide's paper? Or investing in mutual funds, money market funds, or hedge funds which are buying Countrywide's paper? Or maybe you are buying Berkshire Hathaway stock?</p>

<p><em>"it is the perceived problems (fear) that has driven down prices, rather than any real poblems with prime borrowers' ability to pay. "</em></p>

<p>Is it possible the asset backed securities in question were overvalued in the first place and maybe that is why prices are decreasing? Kind of like your condo?</p>
 
<p>awgee -- I detect a lot of anger in your tone. What gives?</p>

<p>Yes, I have owned Berkshire Hathaway stock for quite some time. If I had the capital to buy Countrywide's A paper at 50 cents on the dollar, you bet I would. But I don't, so I invest in Berkshire Hathaway and let Mr. Buffett allocate capital for me. I'm sure gold would be a much better investment though, right?</p>

<p>It is possible that asset backed securities were overvalued. It's also possible that Buffett found lots of undervalued mortgage backed securities, which is why Berkshire invested over $1.5 billion in mortgage backed securities in its latest quarter. (He tends not to buy stuff that's overvalued.) I'm sure Mr. Buffett would appreciate your views on he should be allocating that $50 billion cash hoard to gold instead. </p>
 
<p>Anyone who takes on their servicing portfolio takes on the REO risk, and that will be monumental. Those loans would have to be sold for pennies on the dollar to offset that risk. There isn't a way to effectively offset the default risk through bulk sales, that I've heard of.</p>

<p>My company constantly is buying the servicing rights (and selling others) through bulk sales. I've started working on refinances and then had to hit the brakes several times. For instance, my bank got a call from an appraiser that said..."you do know that this is a geodesic earth home." I said, "uhh no." I found out the hard way that banks frequently purchase loans that are hidden within bulk sales that could not be underwritten and approved. This amazed me.</p>

<p>There is no way that any investor, Warren Buffett or not, could systematically go through a portfolio and hand pick loans to buy. Even if that could be done, there is no way to guarantee a borrower's ability to repay. A person with a 780 fico that qualified full-doc can still default on a loan, however likely that may be. If investors are not buying MBS paper then they probably won't be buying the loans that are backing the paper!</p>

<p> </p>
 
<i>"It is possible that asset backed securities were overvalued. It's also possible that Buffett found lots of undervalued mortgage backed securities, which is why Berkshire invested over $1.5 billion in mortgage backed securities in its latest quarter."</i><p>


Exactly, either is possible, and both are probable.<p>


<i>" I'm sure Mr. Buffett would appreciate your views on he should be allocating that $50 billion cash hoard to gold instead."</i><p>


I doubt it, but then I am much less sure of what Mr. Buffett would appreciate then you, who seem to be <i>"sure Buffett would be interested"</i> and has access to Mr. Buffett's mind and knowledge, <i>"Buffett knows the vast majority of prime mortgage paper is free from the subprime morass"</i><p>


I am bit sceptical of your your powers of discernment. First you claim surity of Mr. Buffett's interest and access to his knowledge and now your detect anger in my tone. I am not angry. I am amused when folks ascribe their perceptions and knoweldge to Mr. Buffet, as if that gives them some credibility. If you have an opinion, why not claim it as your own?<p>


Are you aware of Buffett's purchase of silver, the price at which he purchased, the price at which he divested, and the price now?<p>


Truthfully, if Berkshire Hathaway had purchased precious metals when I did, it's annual rate or return would be much better.
 
<p>Is English not your first language? Are you really arguing that I could not possibly have a metaphysical understanding of Mr. Buffett's knowledge? Point conceded. Indeed, point irrelevant.</p>

<p>I think my comment set forth my opinion of why Buffett might be interested in Countrywide assets pretty clearly. I do claim that opinion as my own.</p>

<p>I'm sure Mr. Buffett would be interested in your superior precious metals investing ability. (Do I need a disclaimer here -- by "sure," I mean to say that Mr. Buffett would likely be interested, which is based on my understanding of the types of things Mr. Buffett is interested in.)</p>

<p>Since you previously admitted to holding CFC puts, I have a feeling your anger may stem from the beating they took today. And although you claim not to be angry, any objective reading of your comments reveals the opposite. Snide comments like <em>"kind of like your condo"</em> evince that quite clearly.</p>
 
<p><em>"Buffett knows the vast majority of prime mortgage paper is free from the subprime morass, and it is the perceived problems (fear) that has driven down prices, rather than any real poblems with prime borrowers' ability to pay. "</em></p>

<p>I speak with many prime/alt-a borrowers that are not considered subprime, and they are screwed. I believe your statement that the vast majority of prime mortgages are ok, is far from the truth. I do not expect many people to grasp the totality of this disaster unless they are immersed in the industry as I am . In fact, I am in very unique position at my bank. I am on the frontlines dealing with customers everday, but I also work hand-in-hand with our secondary pricing desk. Aside from originating new loans, I am furiously trying to do note-modifications for current PRIME borrowers. Some investors are starting to see the light, and they are willing to accept a lower rate for their current loans.</p>

<p>Did you know that Fannie and Freddie have very loose guidelines? In fact they are EASIER to send loans to then other investors. Both entities have "fast-forward" doc types available. In these cases income verification is waived. Sometimes EMPLOYMENT and INCOME, and ASSETS are waived. You can even get a loan approved with a collateral assesment waiver(no appraisal). <u>These loans are still given full-doc pricing.</u> So please tell me how these are not considered "liar loans." The fact is (and yes I mean FACT) that many, many of freddie mac and fannie mae approved loans are RISKIER than many traditional ALT-A loans. They just don't buy negatively amortizing products nor did they pay as high a yield spread premium to banks or brokers.</p>

<p>The investment guru himself, Warren Buffett, may not know the entire picture. He more than likely doesn't. Considering his street-wise investing smarts, I think he adhere to his old addage of "only invest in things you understand." I have been immersed in this industry for a while. I live, eat, and sleep it and I still get headaches when I try and understand it.</p>
 
Marty - You may care to do your homework before you put your foot in your writing again. If you check, you will see that although puts on CFC did decrease in worth, the puts I still hold are way out of the money leaps and the decrease was negligible. There isn't enough premium included for much downward movement. Please check.<p>


You are correct that it was a snide comment. And it was designed to bring attention to your propensity to speak so assuredly and so absolutely about subjects for which you have only given partial thought, <i>"it is the perceived problems (fear) that has driven down prices, rather than any real poblems with prime borrowers' ability to pay"

</I><p>


I was not pointing out metaphysical lack. I was pointing out how you ascribe your own opinion to Buffett, just as the reporter did today, and as so many others do, to somehow give it more creditibility than it actually has. Why do you find it neccessary to ascribe your opinion to Buffet? Can your opinion not stand on it's own?<p>


It should be quite interesting to see if Buffett has anything to say tonight on the financial shows regarding those folks who think they know what he is going to do or should do.<p>


As as regards my investments, I would not profess to have the slightest inkling of what Buffet would be interested in.
 
<p>I'm posting anonymously on a housing blog. I don't think anyone gives my opinion more credibility than it deserves. At least I hope not.</p>

<p>As for ascribing my opinion to Buffett, I have no idea what that means. I offered my opinion as to why Buffett might be interested. That doesn't mean he shares my opinion, or my opinion suddenly becomes more valuable.</p>

<p>For the record, I don't think your snide comment achieved its intended purpose.</p>
 
<p>I see wisdon in Marty's word of buying when everyone else is selling, however, buying a company that may have to file BK shortly may not be the wisest of moves.</p>

<p>But who knows? CW is still alive as of now... until we hear differently... it's a good buy.</p>
 
<p>What Buffett does and what the rumors say he is doing are two different things. What I know is that the rumors are usually wrong like KHOV going to $21 a share because of it. Thanks to a rumor I bought $15 strike puts for cheap. </p>

<p>Countrywide's bonds are still 2000bps to 3500bps below par and the commercial paper market is dead. </p>

<p>So I bought Sept. $10 strike price puts for $.30 and Oct. $10 strike price puts for $.70. I like Buffett rumors. So for the record this is me putting (no pun intended) where my keyboard is.</p>

<p>By no means is this a recommendation for an investment. This is a very high risk trade and I/you could lose all my/your capital. IHB nor I will be responsible for any investment decision you make. Please do your own homework and appropriately invest to your own level of risk tolerance. On a scale of 1-10 this trade is at the highest level of 10. </p>
 
<i>"I see wisdon in Marty's word of buying when everyone else is selling"</i><p>


This wisdom is what most traders refer to as trying to catch a falling knife. Buffett may have said it, but I doubt it, but then I can't claim to know everything he says or thinks. The phrase that the oracle of Omaha did utter is, "Be greedy when others are fearful, and fearful when others are greedy."<p>


<i>"For the record, I don't think your snide comment achieved its intended purpose."</i> Marty, your loss.
 
<img src="http://l.yimg.com/www.flickr.com/images/spaceball.gif" alt="" /><img src="http://l.yimg.com/www.flickr.com/images/spaceball.gif" alt="" /><img src="http://l.yimg.com/www.flickr.com/images/spaceball.gif" alt="" /><img src="http://farm1.static.flickr.com/55/149577823_a00b19286c.jpg?v=0" alt="" />
 
graphrix - yes i did. but that was back in 97-98-99, passing rates were 50-60-70, as opposed to recent numbers like 35-50-70. also, things like credit default swaps, collateralized debt obligations, swaptions were just not mentioned at all! ah, the good old days!
 
I thought the online practice test was not that difficult but when I got the results I didn't pass. It's not that I need it but for all the three letters I'd like to have after my name those are the three I would want. Even if it was "easier" when you took them you still should be very proud.
 
thanks graphrix, for the kind words. and you just reminded me i haven't paid this year's dues





i was a little bored at my job back then, and it pushed me to set aside time and educate myself. the topics were very interesting (well to me anyway), but believe it or not, not in-depth enough. i felt like i enrolled in the course "intro-to-everything-wall-street-for-non-beginners".





i lucked out and had the right background for levels 1 & 3: i have a degree in accounting and level 1 was all about fundamental analysis. level 3 was portfolio management and by then i had spent 5+ years writing software for it. so just the opposite from most people, i found level 2 the hardest.





it has helped me to understand some things easier, but if one reads everything on the study list, i don't see the difference between educating oneself without passing the exam, vs actually spending the time at the exam room...wait, there is one difference -> no annual dues in the first way





and it never directly translated into more money at work, but indirectly it has contributed
 
<p>I find your point interesting that you can have just the same knowledge by reading the study list. As I am sure you know I am an ubernerd and would have no problem reading the material which I would probably find it interesting. The difference is my educational background doesn't relate but it is my own self-education that might help. I had to understand the ABX indices so I found a PDF from Nomura and read it until I understood it. </p>

<p>Many fund managers like to let you know they have it but some either don't have it or don't care like Ken Heebner. I think that the technical part is very important but managers like him use his gut. No matter how many books you read, classes you take or exams you pass there is some things that cannot be taught. </p>

<p>Now if I could just figure out a way to use my ubernerd skills for something other than IHB.</p>
 
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