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In the long run - because US homeowners are not taxed on imputed rental income - renters/the economy are subsidizing owners. Currently, at least in some markets, the aggregate landlord is perhaps unrealistic in his pro forma and subsidizing the renter. So what you say may well be true where...

Not an expert, but how do you avoid IRS Pub 525, p18, "Mortgage Relief upon Sale or Other Disposition?" For recourse loans it looks like income, for non-recourse loans it sounds like it would only matter once the forgiveness pushed your "gain" above the exemption threshold (personal residence).

See for example (CA): http://www.wwlaw.com/forecl.htm Note that this article is dated 1996, but I don't think mortgage default law has changed in Ca since then (default on a mortgage loan does not require a bankruptcy declaration, I believe). In NY, remedies beyond the subject property...

That's the question: gnome pointed out that in most states (FL excepted), the bank can go after other assets when you are delinquent. I was under the impression that this is not true (in most states) for personal residences (assuming we're not talking about investment property) - unless you meet...

California would be another (non-recourse for personal residence, 1st mortgage, only). Anyone else know more?

Is this true? I always thought (at least in most states) that 1st mortgages for a principal residence were non-recourse and that the house was putable w/o having to declare bankruptcy?

maverick74, optioncoach, riskarb

Well put (excuse the pun). The strategy is risky relative to a riskless one (buy a Treasury) because in one outcome (QQQ goes up) you earn a lower rate of return, while in the other you earn more (QQQ goes down). The alternative is not "put your money under a mattress" (which is possibly the...

See for example http://www.phil.frb.org/pcc/workshops/workshop11.pdf

Good post. TA can work because information asymmetries go away slowely, and also perhaps because liquidity traders use common methods. Any others?

As far as I know, secured debt generally means that the bond holders have rights to a specific asset in the event of bankruptcy (say GM owns any real estate etc). Once those have been handed out, next comes senior (unsecured) debt, then junior debt, then preferreds, then common. Others are up...

...but unsecured, right?

Couldn't agree more.

All else equal, the stock falls $0.19 on ex-dividend, so if the option were European, it should trade at about $1.80 (assuming dividend is certain, and PFE vol is low). But since it's American, the assumption is that you will optimally exercise (ie the day before ex-div, or [edit] whatever...

Do you mean the difference between an American and an otherwise identical European call?

Agreed, wasn't trying to undo your basic point, which is very well taken. :cool:

Meant conditional on x: if you use y=ax+b+e, where e is independent of x (and zero mean), the correlation would be greater than -1. Your choice of stock "Y" is more like "short some of X" plus/minus "cash."

The correlation is negative because a<0; it is perfect because ("almost surely" :) ) you chose the conditional variance of y to be zero. Your choice of b and mean(x) ensures a probable positive return for both stocks over the full time period. Edit: Nice website!

Would have thought it's not too good as a trading platform? I've never gotten the hang of the data I/O (always thought the database (?) toolbox a bit weak, but perhaps they've improved it I last used it)- how do you do it? As a system development tool, I think it's great. Big startup...

Factor analysis is probably the way to go, but if you want to market the product you should re-express the statistical factors in terms of something the client can relate to.