Friday, March 21, 2008 0 comments ++[ CLICK TO COMMENT ]++

How Good Is Your Current Investment Knowledge?

No, this is a different kind of knowledge. Paul Krugman has a quite humourous post on his blog about acronymns that have been floating around in the investment world lately:

So, OFHEO got out of line with PCE, leading to a plunge in CDOs backed by RMBS, at least according to ABX. CRE looks similar, according to CMBX, and ABI suggests bad stuff ahead. Meanwhile, both the TED spread and A2P2 are flashing red, not to mention ABCP and ARS, which have just gone away. (Nobody even remembers MLEC.) HELOCs are being cut. Can TAF and TSLF save the day?
(source: Paul Krugman, The Conscience of a Liberal blog, March 19, 2008)

So how well did you understand all that? If you knew the terms, you are probably a bad investor ;) It probably means that you made bad investment decisions and ended up being in the middle of the biggest financial crisis to hit Wall Street in over 25 years.

I know all the terms except ABI and A2P2. If I didn't make my disastrous investment in Ambac, I probably wouldn't know 1/10th of the terms. Believe me, I would have preferred to avoid knowing the terms :)

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