If someone is still wondering where that burst bubble money went, it's not exactly true that it was only money that existed in the form of electronic entries that were adjusted accordingly, on paper.

This WSJ article's title is "How You Can Make $20 Billion." In other words, next time let's not be stupid and let's all of us make $20 billion each. Here is how:

Even as the financial system collapsed last year, and millions of investors lost billions of dollars, one unlikely investor was racking up historic profits: John Paulson, a hedge-fund manager in New York.

His firm made $20 billion between 2007 and early 2009 by betting against the housing market and big financial companies. Mr. Paulson's personal cut would amount to nearly $4 billion, or more than $10 million a day. ...

How did he do it? Believing that a housing-market collapse was coming, Mr. Paulson spent over $1 billion in 2006 to buy insurance on what he then saw as risky mortgage investments. When the housing market cracked and the mortgages tumbled, the value of Mr. Paulson's insurance soared. One of his funds rose more than 500% that year. Then in 2008, he shorted financial shares, or wagered that they would fall in price, profiting again when these companies collapsed.

And are there any investing skills that average investors can learn from his success? Yes. There are no guarantees, of course, but the success of Mr. Paulson and a few other underdog investors lends encouragement to individuals trying to compete with Wall Street's pros.

Here are eight investing lessons of Mr. Paulson's $20 billion gamble, the greatest trade in financial history: http://online.wsj.com/article/SB125823321386948789.html

Happy Christmas stock buying!

Jacek

America’s mainstream religious denominations used to teach the faithful that they would be rewarded in the afterlife. But over the past generation, a different strain of Christian faith has proliferated—one that promises to make believers rich in the here and now. Known as the prosperity gospel, and claiming tens of millions of adherents, it fosters risk-taking and intense material optimism. It pumped air into the housing bubble. And one year into the worst downturn since the Depression, it’s still going strong.

Did Christianity Cause the Crash?

http://www.theatlantic.com/doc/200912/rosin-prosperity-gospel

* * *

The following article was published in 1999:

The Market as God

Harvey Cox is a professor of divinity at Harvard University.

http://www.theatlantic.com/doc/199903/market-god

Originally written by Jacek K. on November 16, 2009 6:19 AM Did Christianity Cause the Crash? http://www.theatlantic.com/doc/200912/rosin-prosperity-gospel * * *

Nice:

A few pages later comes the corrective, the model of a "victor" and not a "victim."  Osteen and his wife, Victoria, are walking around their neighborhood in Houston when they pass a beautiful house being built.  "Most of the other homes around us were one-story, ranch-style homes that were forty to fifty years old, but this house was a large two-story home, with high ceilings and oversized windows," he writes.  "It was a lovely, inspiring place."

Fortunately for the Osteens, they learned that this was the house that Ken Lay had leased to Andrew Fastow.  They came to a renewed appreciation for all that they had, and thereafter refrained from dividing people into "producers" and "parasites."  Victoria later reflected to Joel: "In our wish to keep up with the Joneses, we very nearly succumbed to the sin of pride."

The End.

Crisis? What crisis?

The great jobs-stocks disconnect

Originally written by Jacek K. on November 19, 2009 12:15 PM Crisis? What crisis?  "The market is up because corporate earnings are up. Corporate earnings are up because companies are cutting costs. And the biggest single cost they’re cutting is their payrolls. So they let people go and, presto, their balance sheets look better and their stock prices rise."

The people who I listen to are saying today that nobody has yet worked out why the market goes up when the US dollar goes down but the market does not come down again when the US dollar rises.

Is it behaving like a ratchet, or like somebody blowing up a balloon?

There was also some ruminating today about the rise in leverage. Everybody appeared to agree after the Financial Crisis hit that the price of buying a company should not exceed 3 times its annual earnings (leverage).

The cost of buying companies has recently crept up to be now well over 5 times their annual earnings. That does not look good, folks - here we go again!

Derek 

Originally written by John Bunch on November 19, 2009 8:56 PM And that is one main reason why jobs are not being created in America

But we don't want jobs to be created, because then the stock market will crash for sure...