Smiling Joe, this is what shocks me. My apologies in advance for this long post. The Wall Street Journal literally ought to be interviewing you this week with the kind of information you just came to the board with above. Real observations. The discussion around JOE has become a market debate of national proportions right now. This despite that many in the SoWaller community are rightly exhausted by JOE, and exhausted by Real Estate discussions in general. [That in itself is a good, although unfortunate sign IMHO].
Einhorn is smart and arrogant. In late 2004, I witnessed him (Einhorn) chastize a junior analyst who's hard work had lead him to believe that certain publicly traded subprime mortgage lenders (Accreditted Home Lenders and New Century Financial) were ticking time bombs. Heresey he cried!!! The analysts work was spot on in fact, although a couple years early, as those subprime mortgage lenders started blowing up in 2006 on their way to swift bankruptcies.
Einhorn was right on JOE. It's just that now he is a wrong.
Since I'm protected (by Kurt) by the anonimity that this board provides, I can also share that I used to work directly with Meredith Whitney, since we're talking about arrogance. Meredith shares that trait with Einhorn, but no one that knows Meredith will accuse her of possessing Einhorn's other traits. If you ask me, I'd go a step further, because I had a front row seat to her airheadedness and later nauseating vanity. In 2007, I asked her what she thought about Negative Amortization loans being used increasingly by a couple of California lenders, including Golden West Financial, because I was personally shorting some small cap banks doing neg am loans. Her response: 1) what is a negative amortization loan? So ______, you're telling me there are banks that have made loans more risky than interest only, where borrowers can choose to make a payment that is less than even the monthly interest amount, at the option of the borrower? And the deficiency gets tacked onto the loan? And then the bank records that loan increase as even more positive "earnings?". Yes Meredith [you stupid ______]... if you spent less time setting up photo ops for your prestigious New Jersey prep school alumni yearbook photo shoot, and more time figuring out whats going on in your damn sector, i'd take you seriously, and stop introducing you as pro wrestler JBL's wife to my clients, to hold their interest.
I'll give her credit for sticking to her guns once she turned 180 degrees negative in the fall of 2007. She rode that horse where most would have declared victory too early, including myself for sure. Then, arrogance got the best of her, and continues to do so to this day. She has continued to be negative as many bank stocks that she covered have tripled, quadrupled or worse.
