160.0 Several speakers made good cases to buy stocks. After all, these were value investors and you had to have guts and buy when “there is blood in the streets.” They didn’t know it, but the streets were about to get a lot bloodier. See for yourself in the chart below: The blue circle indicates the time of the conference... We were on the precipice of the greatest financial crisis in 60 years. Everyone was worried... But we had no idea how far the market would eventually fall. The S&P 500 was about 6% off its peak. The financial sector had already fallen about 20%. 140.1 120.0 100.0 80.0 Rent Cost Median Household Income learned those two days had nothing to do with what the speakers said on stage, the investments ideas they presented, the charts they shared, or the balance sheets they studied. The mood in the room was fearful yet constructive. Between every session, folks would get on their Blackberries to check in on the stock market. Whoever got an update would yell it out in the hallway.
Something didn’t add up. And Einhorn knew an earthquake was coming. Later, billionaire hedge-fund manager Bill Ackman shared his research on monoline bond insurers. These companies sold insurance on mortgage-backed securities for a few bucks and paid out hundreds if the bonds defaulted. Ackman argued they’d go bust. They had already started to crater, but they went on to lose another 90% within four months.
RENT INCREASES OUTPACED INCOME GROWTH SINCE 2001 2001-2015
They didn’t know it, but the streets were about to get a lot bloodier.
S&P 500 yet. At that conference, I learned the biggest lesson of my investment career... As investment conferences go, the Value Investing Congress represented It was November 2007, and the financial crisis was looming over Wall Street and all of America. But the market hadn’t crashed
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the best of the best at that time. Every
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speaker managed billions of dollars. Even in the crowd, you could find yourself sitting next to hedge- fund royalty. However, what I
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30 November 2018
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