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Barry Ritholtz

Five Years Ago, Dumb Luck Made Me a Genius

Five years ago today, I made the luckiest market call of my career. A few details and some context first, than an explanation as to why this was so lucky.
Photographer: Jin Lee/Bloomberg News
Photographer: Jin Lee/Bloomberg News

Five years ago today, I made the luckiest market call of my career. A few details and some context first, then an explanation as to why this was so lucky.

In 2005, I knew something was amiss in the global markets. The various metrics we track showed that credit had become a full-on bubble, and was manifesting itself in residential housing. We discovered this by looking at such factors as median income to median home prices -- at the time, it was two going on three standard deviations from the norm. Cost of owning versus cost of renting was also flashing warning signals, as was housing value relative to gross domestic product. Indeed, half of all new jobs being created were related to real estate. All other signs pointed to a major correction in housing, despite the denials from pundits