Saturday, January 5, 2008

Estate agent sets up investment fund to benefit form falling house prices….

Innovative investment fund from Strutt & Parker

YES you are reading this right, an estate agent in the uk is setting up a derivate based investment fund to benefit from falling house prices... so the last few people out there ( estate agents ) who are still talking the market up are now hedging against the market... so the question now is how bad is it going to be????

Posted by axxo @ 03:08 PM (472 views)
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One thought on “Estate agent sets up investment fund to benefit form falling house prices….

  • In this instance, a derivative operates a bit like a betting shop. The bookie (or bank or hedge fund) simply takes bets and matches them against counter-bets. The number of people betting either way will affect the odds given. So if lots of people think prices will rise, then the odds offered on a rise will be poor; but the odds offered on a crash will be high.

    By definition, this is a zero-sum game. Half of investors will lose and half will win. It’s not a perverse way of making money out of the unfortunates who lose their homes; it’s just a gambling system.

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