FinTrust & SilentEcho
FinTrust
I’ve been digging through a batch of early 2000s market forecasts that predicted a crash in 2010—turns out most were wrong. What’s the most stubborn detail you’ve found that was missed by everyone else?
SilentEcho
The stubborn detail that kept slipping under the radar was how the rating agencies modeled mortgage defaults. They treated each loan as an independent event, ignoring the fact that bad housing markets make defaults cluster. That tiny assumption in their models made the whole mortgage‑backed‑security market look safe, and when the bubble popped the flaw became the real trigger.
FinTrust
Yeah, treating those loans like lonely squirrels is a rookie move. Spotting the herd behavior is half the battle—next time just check the correlation matrix before you trust the rating.
SilentEcho
I’ll keep a notebook of those matrices for future reference—just in case the next “lonely squirrel” turns out to be a tightly knit troop.
FinTrust
Noted, just remember to add a color for each cluster, keep the margins tidy, and maybe jot a reminder to eat before the spreadsheet goes sideways.
SilentEcho
Got it—color‑coding the clusters, neat margins, and a lunch reminder set so the spreadsheet doesn’t go sideways.