May 14, 2009

How to make money from Austalia's coming housing collapse

Betting on the house:
THINK house prices here are going to fall? Soon you'll be able to short-sell Sydney housing, by taking out a derivative contract based on indices compiled by Rismark/RPData and quoted daily on the sharemarket.

It's a world-first for the ASX, which means institutional and retail investors can get exposure to housing-like returns - positive or negative - without owning a home.


Bukko_in_Australia said...

How wonderfully all-American! Betting on failure! Trying to make money on decline! Financial instruments that produce nothing of economic value, in contrast to actually investing money in building a new factory or something. (Although when you look at it, the entire sharemarket is just the same. Aside from the initial investment when a company flots new stock, trading shares is all just swapping betting tickets on a race that's in progress...)

There are vehicles like this in the U.S., things with names like SRS and SKF which are "double inverse sector index funds." Basically, you buy these index shares, which are supposedly tied to a group of companies' stocks in an area like banking or retail. If the value of the banks or stores goes DOWN, the value of your shares goes UP!

I read comments from people on several doomster econoblogs I follow who are talking about their experiences with these things. Being followers of blogs that are forecasting economic disaster, these vultures have negative expectations for the U.S. economy, and they think these "investments" are a good way to profit from their pessimism.

The comments are often along the lines of "Bank stocks are getting hammered. Why isn't my SKF going up?" Uh, could it be because the rules and valuation of the "investment fund" are set by the same financial maggots who would have to pay out money if the "double inverse" feature kicked in? And because they'll game the rules any way they choose, so they won't have to pay you money?

As much as I detest financial scammers, there's a certain satisfaction in seeing people who want to make money on losses get shafted themselves.

G. said...

Apparently this has been years in the making, and it's an ASX exclusive world first. Aussie pride, mate!!!

You would think someone might have noticed what's happened in the world while they have been working on this clever little scheme...

Bukko_in_Australia said...

You would think someone might have noticed what's happened in the world while they have been working on this clever little scheme...Perhaps they have, and they've noticed that suckers are STILL being born every minute. So the sharpies are rubbing their hands together, in order that they might be nice and warm when they snatch the lollies from the babies...

I confess I didn't read the SMH linky before commenting, because I glommed what it was about. Now that I have, I see it's as arcane as I thought. These derivatives will be based on some easily manipulated black box forumla? They'll be available for five capital cities? (What -- no Hobart or Darwin?!?) They expect BANKS to invest in these?

The "investment" world is looking ever more mawkish. Going forward, I can even see that the concept of "money" could become obsolete, as it's ginned up like these real estate derivatives. Mrs. Bukko and I are at the point where we might convert everything we have into gold coins, and literally bury it in the back garden. (Especially because our bankmaggots in Zurich are hinting that they might kick us out because our account is not big enough. "You can't top up to more than a million U.S. dollars? Then your money's no good here!")

Fuck this shit! I never thought I'd be one of those lunatics who'd do like Dark Age peasants fearing a barbarian invasion. (I'm into the German section of "Decline and Fall of the Roman Empire" now.) But it's making more sense. "Save qui peut!" as the French would scream.


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