Getting old has pluses and minuses. One recent plus is I can finally play some decent tennis, its only taken 15 years of work! One recent negative is I can only maintain a high standard for one set before getting tired. C’est la vie.
I mention this as we move closer and closer to the 20 year anniversary of the GFC. 20 years is a long time. When I started working people were still talking about Black Monday, 19 October 1987. I remember in the early 2000s thinking, why they still talking about that - old news! But because everyone remembered it, we have never really seen something similar, at least not for the S&P 500. Yes the S&P 500 has fallen - but in this case it gapped down.
As the GFC recedes into the distant past for most of us, I was struck by a strange strange symmetry when looking at markets. As hard as it is to believe now, through 2006, 2007 and early 2008, everyone KNEW subprime mortgages were a problem, but were not in the least bit worried about prime mortgages or big banks. The key word at the time was “contained”. The KDP High Yield only really sold off in late 2008.
This was despite mortgage delinquency rates beginning to move higher in 2006.
The GFC was about subprime credit working its way up to prime. If you have seen the movies from the time (The Big Short), the big money trade was working out that prime was the problem, not subprime. So why do I mention this?
