Another subprime lending bubble ahead?

http://www.cnbc.com/2016/06/02/jamie-dimon-just-sounded-the-alarm-on-auto-loans.html

Bought puts against a handful of subprime auto lenders I've dug up that appear to be weak and vulnerable.

I've hedged my bets by buying a call on CACC, which is one of the lenders I have a put on that looks to be the best of the bunch.

Yesterday I bought a hundred shares of the consumer rent to own lender CONN at around $9 a share - it just sold off hard, is down nearly 90% in the last 2.5 years, and I see that Point72 just bought up nearly 5% of the shares a few weeks ago.

 

Re CONN, I sold 50 of my 100 shares @ $11.75 on today's big jump.

 

Re CONN:
Transaction
Date Transaction
Type Dividend Per
Share Shares
Transacted Share Price
$ Split
Ratio Commission
$ Transaction
Value $ Share
Balance

6/2/2016 Buy 100.0000 9.0000 0.00 900.00 100.0000
9/21/2016 Sell 50.0000 11.7300 0.00 586.50 50.0000
12/6/2016 Sell 30.0000 12.5000 0.00 375.00 20.0000
12/9/2016 Sell 10.0000 14.4000 0.00 144.00 10.0000
3/1/2017 Buy 10.0000 8.5250 0.00 85.25 20.0000
4/26/2017 Sell 10.0000 16.8000 0.00 168.00 10.0000

 

Re Re CONN:
Transaction
Date Transaction
Type Dividend Per
Share Shares
Transacted Share Price
$ Split
Ratio Commission
$ Transaction
Value $ Share
Balance
6/2/2016 Buy 100.0000 9.0000 0.00 900.00 100.0000
9/21/2016 Sell 50.0000 11.7300 0.00 586.50 50.0000
12/6/2016 Sell 30.0000 12.5000 0.00 375.00 20.0000
12/9/2016 Sell 10.0000 14.4000 0.00 144.00 10.0000
3/1/2017 Buy 10.0000 8.5250 0.00 85.25 20.0000
4/26/2017 Sell 10.0000 16.8000 0.00 168.00 10.0000
6/6/2017 Sell 10.0000 16.8000 0.00 168.00 0.0000

 

Personally I think the relatively low interest today - simply to encourage economic growth - are storing up massive problems for the future. It may be some years further down the line but many people have stretched their finances to the limit and will struggle to cover higher mortgage payments as and when rates eventually rise towards "more traditional" levels.

 

I agree. We're seeing credit and asset bubbles again.

 

The problem is that by the time most people see the credit/asset bubbles it will be extremely difficult (if not impossible) to deflate them safely. Why do people never learn!