heifetz

no it's not, and I know the two are different definitions. However, what I'm saying is that a 7x 1st lien leveraged loan against a company that is trading at 14x P/E is essential 50% the market value of the company. Of course, the hard assets of the company is probably a lot less than that.

You can short or buy puts on high yield ETFs, such as HYG and there are probably some others. However, unless you know what you're doing, and have risk management, it's probably not advisable to hold longer duration short positions. The market may ultimately go down, but in the mean time, you'll be losing money and may not profit very much when it ultimately does go down.

The derivatives were created and rated on the assumption that the borrower's default rates were consistent with historical default rates. Of course that was not the case, and losses became multiples higher, and blew up derivatives that were highly levered. However, derivatives didn't cause the losses, borrowers defaulted!

most companies also have hard assets, e.g. inventory, real estate, IP, equipment, etc. If you're ok with paying 15x P/E which is the average S&P P/E, then 7x leverage isn't so bad...

Although the companies with these levered loans are a lot smaller than S&P 500 companies.

Sure companies will and can do that, there has been pretty good history of really large companies committing financial fraud. However, I don't think there ever has been systematic fraud in the US, unlike with subprime mortgages

no it's not.

The subprime crisis was precipitated by a lot of people taking out mortgages with either blatantly or coerced false income information in their mortgage applications on homes that had inflated values. Once home prices stopped going up as much and interest rates started increasing, these people were no longer able to make their mortgage payments.

Leveraged loans at 7x ebitda are still less leverage than someone taking out 90% LTV mortgage (90% LTV can be thought of as 9x leverage against your equity). Companies usually also have more flexibility to increase their income, or decrease their expenses compared to an average person. And mortgages have required amortization where as most levered loans to my knowledge are interest only.

All in all, unless a significant % of companies taking out levered loans are submitting fraudulent financial filings, this is nothing like the subprime crisis.

I think the reason why this is a story that is causing a lot of interest and outrage is that Soros was right! Sandberg, Zuck and co, instead of reflecting on what was actually happening, and investigating the issues that Facebook was causing, or was being used for, chose to try to play defense and attach the people and organizations that were criticizing them. If Facebook was serious about becoming a "good" platform, then it would have acted sooner. Instead, we can look back and say that they pretty much only care about growing revenue and did not care too much about these issues, until they because front and center after Trump was elected. There is probably some sexism towards the over criticism of Sandberg over Zuck. But at the same time, Zuck was more hands off while hosting facetime live from his backyard, and traveling around the US, and proclaiming how great Facebook was, while Sandberg is suppose to be the day to day operator. I think Zuck deserve a lot of the same blame for this, as the CEO and the founder.

it's 2018, but Saudi Arabia is pretty much stuck in the middle ages. The curse of having natural resources that pays for everything the country needs.

makes sense, wondering why it took so long to roll out this feature, isn't this one of the original uses that Zuck had in mind when he created Facebook?

funny how billions of dollars brings out the worst in people (or the worst people)

and BTC is becoming less useful in the real world (unless you convert it to a real world currency)

just because someone put in a bid, it doesn't mean that the owner of the assets have to sell to the highest bid. In this case, why does the owner have to sell to Thiel just because he has the highest bid?

how is the raw spring water described in the article any different from bottled spring water like Perrier?