Like how did they make money by predicting it ? what was the strategy?
In: Economics
If you think a given set of stocks are overvalued, you can effectively buy the future right to sell them at their current high price (there are several methods to do this) regardless of what their future price is.
If for example you did this with Lehman Brothers, WaMu, Ford, or one of the other companies that got absolutely obliterated in the crash…..
You made a fortune….
Also, if you bought Ford or one of the other severely destabilized stocks ‘at the bottom’ (F was down to $1) and the company survived or got bought by a competitor using a stock swap…. You made money.
If you bought real estate in HCOL markets after the crash (or even before it) and held on to it through today…. You made A LOT of money (houses that sold for 80k during the worst of the crash are now in the 400-700k range)….
Finally, the federal government’s bail out of the banks was really just a stock purchase (they gave the banks money, the banks gave the government stock) – and so the government made a huge amount of money after the recovery by selling off that stock (which in some cases more than doubled in value)…..
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