this is what happens when you chase a yield
 

http://www.post-gazette.com/pg/07217/807090-28.stm

An old trader friend that I know told me years ago that his #1 rule is to never chase a yield. Poor guy in the above link did that and got [censored]. Now its time for the hedge funds to face the music.

Re: this is what happens when you chase a yield
 

?? This wasn't a hedge fund that went belly-up, it was a bank. He was parking his cash in a savings account, not chasing a rate.

I come from a working class family and really feel for this guy, but it is his responsibility to know how much of his money is insured. I'm not sure why you lay into hedge funds here, they don't seem to be a part of the equation at all.

Re: this is what happens when you chase a yield
 

Gonebroke2, did you even read the damn report? It was his SAVINGS ACCOUNT!!! Why are you so damn stupid??

I feel sorry for this guy somewhat, but if you don't understand how the FDIC works then it is no different then your auto, health or any other insurance.

-Brendan

Re: this is what happens when you chase a yield
 

I hope the bank directors actually go to jail if they were speculating with savings account money.

(ahahahahaha yeah right)

Re: this is what happens when you chase a yield
 

the guy in the article was chasing a higher interest rate. That's why he switched banks and the one offering 5% failed. It's really just bad luck though.

Re: this is what happens when you chase a yield
 

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Gonebroke2, did you even read the damn report? It was his SAVINGS ACCOUNT!!! Why are you so damn stupid??

I feel sorry for this guy somewhat, but if you don't understand how the FDIC works then it is no different then your auto, health or any other insurance.

-Brendan

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No I didn't read the report. I just post random comments with random links. You [censored]. I was just showing you one example of what happens when you chase a yield. He switched banks to make an extra few tenths of interest and he got [censored]. I am relating this to hedge funds because that is exactly what they did with the subprime paper. They chased high yield paper and now they are going bellyup.
Over a trillion dollars are going to be lost.

Re: this is what happens when you chase a yield
 

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Gonebroke2, did you even read the damn report? It was his SAVINGS ACCOUNT!!! Why are you so damn stupid??

I feel sorry for this guy somewhat, but if you don't understand how the FDIC works then it is no different then your auto, health or any other insurance.

-Brendan

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No I didn't read the report. I just post random comments with random links. You [censored]. I was just showing you one example of what happens when you chase a yield. He switched banks to make an extra few tenths of interest and he got [censored]. I am relating this to hedge funds because that is exactly what they did with the subprime paper. They chased high yield paper and now they are going bellyup.
Over a trillion dollars are going to be lost.

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what % of that trillion dollar loss will be realted directly to hedge fund value losses on hedeg funds chasing yield like you said?

and of that value loss, what % does that represent of the hedge fund industry (or even more narrowly, the losses hedge funds endure this year, 2007? )?

Barron

Re: this is what happens when you chase a yield
 

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I am relating this to hedge funds because that is exactly what they did with the subprime paper. They chased high yield paper and now they are going bellyup.
Over a trillion dollars are going to be lost.

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Says who? For one trillion to be lost there would have to be in xcess of 10Trillion in subprime mortgages or $100k for each family in the us. And most of the bad loans written in 2006. Sounds unpossible.

Re: this is what happens when you chase a yield
 

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Over a trillion dollars are going to be lost.

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No, I really don't think so.

Re: this is what happens when you chase a yield
 

A guy that age, who grew up during the Depression, should know better.

Re: this is what happens when you chase a yield
 

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A guy that age, who grew up during the Depression, should know better.

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Should know better than keeping his money in a savings account? Old people are very susceptible to meeting a local person and trusting them based on their assurances.

Re: this is what happens when you chase a yield
 

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A guy that age, who grew up during the Depression, should know better.

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Should know better than keeping his money in a savings account? Old people are very susceptible to meeting a local person and trusting them based on their assurances.

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A guy that age, who grew up during the Depression, should know better.

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Should know better than keeping his money in a savings account? Old people are very susceptible to meeting a local person and trusting them based on their assurances.

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FDIC insures up to 100k per bank account [I think a checking and a saving count as two]; you're also insured for another 100k if you open a joint account with someone else. So that means you're insured up to 300k if you have three accounts.

You have 300k+ in cash and there are many other banks around. What's your play?

FWIW, I do feel bad for him. But I'm currently tilted right now because it looks like no one gave him any logical advice on how to protect his money. I probably wouldn't care if he was investing the stock market and lost moneys. But he was investing his moneys in a place where if you do correctly, you're guaranteed to not lose moneys!!@#!@#!!@

Re: this is what happens when you chase a yield
 

I may have heard this incorrectly. But hasn't the FDIC traditionally returned all the money in all accounts regardless of the limit?

So there's probably a 98+% chance that this man gets his money back?

Re: this is what happens when you chase a yield
 

it sucks but the paper is being melodramatic. For a 77 year old, 200k is enough to last a long time. 10k a year in interest and 10k a year from the principle should see him living comfortably until his death. They talk of him committing suicide or whatever, please.

Re: this is what happens when you chase a yield
 

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it sucks but the paper is being melodramatic. For a 77 year old, 200k is enough to last a long time. 10k a year in interest and 10k a year from the principle should see him living comfortably until his death. They talk of him committing suicide or whatever, please.

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It was for his grandkids.

Also, for those of you that don't feel sorry for him because he should have known better... do you have ANY relations with YOUR grandparents? Old people are usually very trusting of people to do their jobs.

Re: this is what happens when you chase a yield
 

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I may have heard this incorrectly. But hasn't the FDIC traditionally returned all the money in all accounts regardless of the limit?

So there's probably a 98+% chance that this man gets his money back?

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He is going to get most of his money back from the bankruptcy proceedings, but yes I think you are right, the fdic will cover the rest. BTW the FDIC coverage levels are posted everywhere in a bank.

Re: this is what happens when you chase a yield
 

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it sucks but the paper is being melodramatic. For a 77 year old, 200k is enough to last a long time. 10k a year in interest and 10k a year from the principle should see him living comfortably until his death. They talk of him committing suicide or whatever, please.

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20k/yr to live off of? Property taxes, health insurance, utility bills will exceed that much per yr. Maybe he has a pension plan, if not how is this guy gonna eat?

I didn't post this article for anyone to feel sorry for this guy. Although it does suck to be in his shoes. I just wanted to show that chasing a yield that appears to be a sure thing can turn out badly.

And this relates to current market conditions because of these hedge fund managers chasing high yields on subprime paper. Unfortunately, that paper was marked to model and not marked to market. That is not to say the market cant go up from here. European central bankers said that they are willing to inject an unlimited amount of money into the system to keep things afload. I have no reason to believe the FED wont do the same thing.

Re: this is what happens when you chase a yield
 

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And this relates to current market conditions because of these hedge fund managers chasing high yields on subprime paper. Unfortunately, that paper was marked to model and not marked to market. That is not to say the market cant go up from here. European central bankers said that they are willing to inject an unlimited amount of money into the system to keep things afload. I have no reason to believe the FED wont do the same thing.

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Please post a link to the guys claiming there will be a trillion dollars in sub prime losses. I'm trying to read everything I can on that market and I'd like to see where their loss rate estimates came from.

Re: this is what happens when you chase a yield
 

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I may have heard this incorrectly. But hasn't the FDIC traditionally returned all the money in all accounts regardless of the limit?

So there's probably a 98+% chance that this man gets his money back?

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He is going to get most of his money back from the bankruptcy proceedings, but yes I think you are right, the fdic will cover the rest. BTW the FDIC coverage levels are posted everywhere in a bank.

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But that was my point... They post em'. But it doesn't matter since they've covered every single dollar in every situation IIRC.

Though what he did was pretty dumb.

Re: this is what happens when you chase a yield
 

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But that was my point... They post em'. But it doesn't matter since they've covered every single dollar in every situation IIRC.

Though what he did was pretty dumb.

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And they put them on almost every scrap of paper they mail you as well.

Re: this is what happens when you chase a yield
 

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it sucks but the paper is being melodramatic. For a 77 year old, 200k is enough to last a long time. 10k a year in interest and 10k a year from the principle should see him living comfortably until his death. They talk of him committing suicide or whatever, please.

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20k/yr to live off of? Property taxes, health insurance, utility bills will exceed that much per yr. Maybe he has a pension plan, if not how is this guy gonna eat?


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Maybe uits different because I live in Canada but here you can rent your own place for 650 a month, then you dont pay property tax, and utlities are what, 200$ a month? We do get medicare so no health bills, tack on an extra 100$ a month for drugs not covered by medicare, but add 500$ a month from old age pension and you are plenty fine. Of course, our taxes are close to 50% because of all this, but then expenses are lower.

Re: this is what happens when you chase a yield
 

What I want to know is why the bank accepts deposits above 100k. At that point, they ought to tell you, "Hey, we'll take your money, but its not insured and you should probably deposit elsewhere or put another name on the account, etc."

Re: this is what happens when you chase a yield
 

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What I want to know is why the bank accepts deposits above 100k. At that point, they ought to tell you, "Hey, we'll take your money, but its not insured and you should probably deposit elsewhere or put another name on the account, etc."

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WTF?

Re: this is what happens when you chase a yield
 

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What I want to know is why the bank accepts deposits above 100k. At that point, they ought to tell you, "Hey, we'll take your money, but its not insured and you should probably deposit elsewhere or put another name on the account, etc."

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If you were a bank, would you seriously say "We don't want any more of your business, please go to our competitor"? And they do tell you it isn't insured. As others have mentioned, FDIC insurance limits are posted everywhere and are listed in the documents you sign when you open the account. If you don't know it isn't insured above $100k, it's only because you didn't read.

Re: this is what happens when you chase a yield
 

They could suggest adding another person to the account to avoid this problem instead of lying to him and suggesting his money is safe when it isn't.

Re: this is what happens when you chase a yield
 

wow you're clueless. they aren't lying to him at all. Have you ever been to a bank? In every bank ever the signs are all over the place. I knew that FDIC insurance ended at $100k when I was like 6. People have a responsibility to look out for themselves.

Re: this is what happens when you chase a yield
 

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People have a responsibility to look out for themselves.

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why do you hate america

Re: this is what happens when you chase a yield
 

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People have a responsibility to look out for themselves.

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why do you hate america

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lol [img]/images/graemlins/crazy.gif[/img]

Re: this is what happens when you chase a yield
 

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And this relates to current market conditions because of these hedge fund managers chasing high yields on subprime paper. Unfortunately, that paper was marked to model and not marked to market. That is not to say the market cant go up from here. European central bankers said that they are willing to inject an unlimited amount of money into the system to keep things afload. I have no reason to believe the FED wont do the same thing.

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Please post a link to the guys claiming there will be a trillion dollars in sub prime losses. I'm trying to read everything I can on that market and I'd like to see where their loss rate estimates came from.

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I wouldn't be surprised if that's what it turns out to be. I've seen random snippets that the pseudo-government companies(FNMA, etc) hold a trillion in subprime paper. Then there's everyone else that holds it - banks, pension plans, hedge funds, et al. A couple weeks ago that paper was being bought for between 30 and 50 cents on the dollar.