There's no way in hell the typical investor can rate their own potential investments. Most people have no idea about these things.
Exactly, so they just base that on leverages on other fictional and complex concepts they come up with to confuse people and make gigantic scams.
LOL, now you got me, but I think that the last world crash from the Lehman Brothers is a good example of what is a global level scam...
Well, Lehman was heavily leveraged, besides having so much $ in toxic assets. Do you really fault the rating agencies for Lehman and Bear going completely under? They were obviously taking on too much risk with leverage and being overly concentrated IMO. That's exactly the reason I limit short exposure mainly to put options and perhaps a few covered calls and covered shorts, and also why I rarely risk any more than 5% of my capital on any one investment or 2% on any one trade.
Sure, but what credibility have rating agencies when they rate toxic assets as A's and the next day they rate them as toxic? It's a nonsense that they can continue to operate after that.
Following the burst of the last US housing bubble, for which they were greatly responsible, ratings agencies have been trying to regain credibility by downgrading the ratings of sovereign. Generally the markets have been generally ignoring these downgrades, as they should.
Quite a few countries have been out of the markets due to these ratings being downgraded, I do think it's just a game though, they have privileged information and they can manipulate the markets as they wish, it's just too much power.
I agree with that, I think that when too much power is concentrated in an organism as complex as a rating agency it's just normal that people get suspicious...
It's even worse because most people don't really understand what rating agencies do or what they are for, the lack of information makes people be too suspicious of them.
