In 2004 I was talking to a customer who just had her house appraised for $400,000. I didnâ€™t think the house was worth 300k, but I was just the loan officer so it didnâ€™t matter. She had a $250k mortgage, owed about 60k in credit card debt, and was asking me if she could take another 20k to put in a pool. Although I would have made more money I wasnâ€™t sure she should do it. I didnâ€™t last too long in that industry.
A couple of years later I was talking to a friend who had also been in the mortgage industry and we were waiting for the bubble to burst. We talked about how we wished we could short the housing market because a decline was imminent. Today I realize most of the unique, one of a kind, amazing ideas I have are already being thought about and acted upon. This was no different.
In 2004, a couple years before my brilliant idea a man named Alec Litowitz had the same idea. Except Alec had a little more experience in the financial industry. Alec, with the help of some other Chicago financiers, created a hedge fund called Magnetar. In late 2005 the housing market was slowing down and the financialÂ Â Â (more…)