After being burned by tech stocks in the late 1990s and real estate and stocks again in the first decade of the 2000s, investors are trying to be alert for bubbles. This post argues that the way to spot a bubble is to follow the quantitative analysts and investors. He thinks he’s found the next bubble by following a few prominent hires at big firms. To get the full story you have to click on the link at the end of the post.
So how is it that the exposures (particularly in mortgage portfolios at the subsidiary called Greenwich Capital) as well as trading practices at the firm were allowed to spin out of control under the watchful eye of Dr. Rebonato? It so happens that Dr. Rebonato did not seem to be too concerned with how to keep the bank from collapsing and instead was focused on writing his new (at the time) book called Plight of the Fortune Tellers. In fact the book was published while Dr. Rebonato was still at RBS (in 2009).