He doesn’t think we’ve seen the end of the credit-tightening cycle, and says it’s “increasingly likely” credit deterioration will spread from subprime to Alt-A and Option ARMs. Alt-A loans were 77% of IndyMac’s 2006 origination, and option ARMs were 54% of Downey’s. Countrywide Financial Corp. (CFC) carries 42% option ARMs in its portfolio, and insider sales hit a five-year peak this quarter.

Or instead of playing the stock market you could just buy a house.