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Ratings Agencies Should Be Downgraded

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They helped cause crisis. Now they're helping it continue.

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The Central Threat

I've traded stocks since the early 90s. I missed '87, but survived the Internet Bubble, the Homebuilding Bubble, the Crude Bubble and Long Term Capital Management. I'm not Methuselah, and don't claim to have the wisdom of Solomon. But I'm still here.

Let me tell you how this crisis is the same as what came before, how it's different, and a modest idea for how to solve the current meltdown.


The Familiar Themes

There are many smart people who saw this coming. We all have our stories of having never made a dime, despite both dire outlooks and efforts to capitalize spending cash and time playing the short side of the various names imploding over the last few weeks.

Minyanville has been labeled a group of perma-bears for as long as I've been part of it, largely because the folks here have forecast this exact type of crisis. Now it's arrived, and is picking up steam. It's curious, but a central frustration running through many of us is:

a) There isn't any satisfaction in being right for when no one listened to your warnings, which would have averted the crisis; and

b)
the same agencies and offices who enabled this problem to grow unchecked are now being relied upon to come up with the solution.

Those who see train wrecks coming tend to be a bit removed from the panic when it finally happens. We all suffer the collateral damage, but if you knew the risks and kept your discipline, you controlled your downside to a reasonable degree. At the very least, if you knew a train wreck was coming, you probably had the good sense to get off the train.

It's frightening to watch -- and I feel terrible for the folks losing their jobs -- but portfolio risk can be controlled.


Is there another Bear Stearns out there?
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Position in SDS

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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