Author Topic: Definitely In A Bubble  (Read 4235 times)

LC

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Re: Definitely In A Bubble
« Reply #40 on: November 04, 2019, 07:01:17 AM »
All banks forecast PD LGD EAD for their auto portfolio.

PD and EAD are usually quite accurate but the problem is LGD (Severity). As you say banks must dispose of a quickly depreciating asset. These severity models are the least accurate particularly because many times there is lack of transparency into deal-level data. They are quite aware of this problem as is the FRB, usually accompanied by higher capital levels.
"Lethargy bordering on sloth remains the cornerstone of our investment style."
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Castanza

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Re: Definitely In A Bubble
« Reply #41 on: November 04, 2019, 11:39:31 AM »
All banks forecast PD LGD EAD for their auto portfolio.

PD and EAD are usually quite accurate but the problem is LGD (Severity). As you say banks must dispose of a quickly depreciating asset. These severity models are the least accurate particularly because many times there is lack of transparency into deal-level data. They are quite aware of this problem as is the FRB, usually accompanied by higher capital levels.

CACC Earnings missed. Share price down 8% today and 2020 earnings projections are estimated to be down 30-60%.