(Flashback: the scene opens with Logan and Melanie, August 2008)

For almost a year Logan had been monitoring periodic reports on the numbers of mortgage defaults, tracking continued weaknesses system-wide there.  To him, in addition to other numbers he was tracking, the reports were harbingers of a potential and incredibly bleak situation.  Alone amongst a group of investors who were partners in several funds, Logan had elected to purchase financial instruments that, in effect, would result in significant returns to him in the event of a market crash.   Thus, instead of purchasing instruments that the others were backing, which would allow them to book gains if the bond markets continued to be buoyed by rising house prices, he was purchasing the instruments that “ran the opposite way,” based on how or whether trends reversed, that is, if housing prices started trending downwards, not upwards,as the other instruments his peers were investing in.  If he was correct, his investments would pan out.  If they were correct, he would lose out.

He began by buying relatively minor amounts of such instruments; but as the numbers indicating defaults or mortgage payment delays grew, he began to buy more of the contrarian instruments.  This meant he was taking a greater stake in that area of the market.  Although he wasn’t the only active buyer who was building up such a presence in this area of the market, he was one of the few with a notable investment record to do so.  Whispers amongst his peers began to spread that Logan had finally lost his touch, if not his much-admired financial “sixth” sense.

By late 2007 and through the first half of 2008, as his stake in these instruments grew, his friends and other investors began to rib him mercilessly about his strategy, at times openly.  “Logan, if you don’t watch out you’ll be left with a bunch of warrants in a few years that won’t be worth even pennies to the dollar,” an erstwhile good friend and peer would greet him every time they met for a squash game at a health club. Logan’s friend and the fund the friend and a few other investors led had been taking greater positions at the opposite end of Logan’s bet.  He was boasting about possible returns he hoped to see by end-September.  Logan would just shrug his shoulders whenever he started to boast, and pretend to take his frustration out in the squash game.   Logan inevitably crushed him in the court.