RE:RE:RE:RE:Some 300 US banks are at risk Yeah Mouserman - I recall at that time attending a company meeting where the guest speaker was a money manger from the US with about 2 billion in assets under administration who saying the opposite that the residential sector was only 5% of the US economy and so we had nothing to worry about.
When he was done, I asked him a simple question - "The banks are leveraged in excess of 30:1, so doesn't that make the potential situation much worse?" He said not to worry about that!! So there were some big money managers back then that were complete idiots. For my part, with hundreds of households as clients, I couldn't take the risk to short their money but what I did was starting in late 2007 move a significant part of my book of business to fixed income and cash in anticipation of the storm that was coming. So when the storm hit, my client portfolios ranged from slightly down to actually being up due to the gains in fixed income as interest rates fell. This compares to the equity market going down 50%.
Right now I do see a storm coming but it won't be as bad in the US as it will in Canada since most people there are locked into 30 year fixed rate mortgages and so they don't need to renew their mortgages at higher rates. The opposite is true in Canada where 60% will have to renew at higher rates or have already done so.
So with this in mind, my investment in FTN is not long term and I have a finger poised on the sell button at the first sign of real trouble. When the anticpated storm passes and FTN is back at 5 or lower, I will back up the truck.