Wasn’t Robert Shiller going to create house price derivatives for this purpose? Wonder what happened with that… I vaguely recall markets turned out to be too local
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Replying to @Meaningness @ctbeiser
I sort of remember his arguing that an asset you can’t short will inevitably be subject to undesirable speculative bubbles, so housing derivatives would help stabilize the market
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Replying to @Meaningness @ctbeiser
They were created, listed at the CME, and never traded. Same story for the vast majority of new product listings attempted. What makes for an active market is a fun thing to think about
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Replying to @garybasin @ctbeiser
Tx! My recollection is that Shiller’s original idea was that they should be a product for regular folks… which would mean repackaging them as mutual funds or ETFs you could hold in a 401(k) or something. Regular folks don’t have futures accounts (for better or worse…)
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Nowadays there’s an ETF for everything, but I guess that wasn’t true ten-ish years ago
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Replying to @Meaningness @ctbeiser
The futures would have been super highly correlated with REITs, I bet, which have been easy to trade since like the 90s
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Replying to @garybasin @ctbeiser
I don’t have numbers or details, but my recollection is, not so much. There were no house REITs (or those of us skeptical in 2007 would have shorted them). Closest thing was apartment REITs, but that market has somewhat decoupled dynamics.
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Replying to @Meaningness @ctbeiser
Ya that's true, not much institutional holding of SFHs until post-crisis. So you think if they listed an inverse ETF it would have had interest back then? I'd think only from speculators, and maybe not even. Not enough leverage
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Replying to @garybasin @ctbeiser
No, I think very few people understood the problems pre-crisis.
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Replying to @Meaningness @ctbeiser
On a related note, the planets have recently aligned in such a way as to have me looking into the value of using MACHINE LEARNING to price and trade individual mortgages
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This sounds like an interesting technical problem, in any case!
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