Derivatives
At the peak of the last housing bubble burst in 2007 and 2008 , the estimated value of the global derivatives marketplace was about $ 1,500 trillion . Today , the global derivatives market is closer to $ 3,000 trillion and may reach closer to $ 4,000 trillion by 2027 if the same annual growth rates continue , as per Globe Newswire . The frozen global derivatives market was the main cause of the Credit Crisis or Great Recession back in 2008 .
A derivative is a hybrid financial and insurance instrument that can be leveraged up to 50 times . Or , it ’ s a glorified bet on the future direction of things like interest rate directional trends as seen with interest rate option derivatives . Even though us mortgage brokers and real estate investors were blamed by the media for the Credit Crisis , defaulted subprime
mortgage debt represented less than 1 % of all debt that imploded back then .
Denial or Research Pick Your Poison or Solution
What we avoid in life controls us . It ’ s usually best to research as many different positive , neutral , or negative sides to any story or asset class like real estate . You ’ re more likely to survive any economic downturn if you make precautionary plans and keep your eyes wide open for new opportunities that few others around you can see at the time .
Denial is usually the most common first reaction when presented with dissenting opinions or scary topics , especially if you work or invest in the real estate or financial sectors . Yet , you must thoroughly analyze all sides , question everything ( especially your own perspectives ), and focus on the potential opportunities or solutions .
The harder we fall , the higher we bounce back , hopefully . If the Federal Reserve does a massive pivot and starts cutting rates again and increasing their Quantitative Easing strategies with more asset purchases ( stocks , bonds , and mortgages ) to boost the economy again , the market may do another positive market swing skyward . Only time will tell , so get your popcorn ready !
MEET RICK TOBIN
Rick Tobin has worked in the real estate , financial , investment , and writing fields for the past 30 + years . He ’ s held eight ( 8 ) different real estate , securities , and mortgage brokerage licenses to date and is a graduate of the University of Southern California . He provides creative residential and commercial mortgage solutions for clients across the nation . He ’ s also written college textbooks and real estate licensing courses in most states for the two largest real estate publishers in the nation ; the oldest real estate school in California ; and the first online real estate school in California . Please visit his website at Realloans . com for financing options and his new investment group at SoCal Real Estate Investors for more details .
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