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
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
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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Replying to @Meaningness @garybasin
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
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
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
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
No, I think very few people understood the problems pre-crisis.
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Replying to @Meaningness
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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I am unable to comment publicly even on my ability to comment publicly on this matter but I am glad to read this thread :)
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