On Wed, Jan 01, 2003 at 02:53:25PM -0600, Julia Thompson wrote: > If fewer houses are being bought, that will push down the demand for the > insurance.
It would have to be a LOT fewer houses being bought in the future, or if Fannie Mae or Freddie Mac drastically reduced their requirements for mortgage insurance, to account for MTG's low price. If the former, a big drop in demand suggests a big drop in house prices. If the latter, I'm not sure what it predicts. > Or there could be a prediction of increase in mortgage defaults, > which doesn't say much for the feeling about the economy in general. Actually, defaults have been increasing quite a bit already. They are at their highest levels in years. I guess that is rising unemployment and slowing economy at work. But even factoring that into the price, it would still be predicting many more defaults in the future. > Or it could be that a significant portion of the stock was owned by > mutual funds who had people wanting to cash out, and that that was > something the fund managers chose to sell when they were figuring out > what to liquidate. That isn't likely. The market is more efficient than that. If MTG was likely to provide high returns with low risk, because the price had been beaten down from mutual fund selling, then within a short time other investors would swoop down and buy it in bulk, thus bringing the price back up to a "reasonable" prediction of the future prospects. -- "Erik Reuter" <[EMAIL PROTECTED]> http://www.erikreuter.net/ _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
