A year ago, I wrote in the Philadelphia Business Journal that 2007 would be the year of the so-called “Goldilocks” economy: not too warm, not too hot. Growth would be sluggish for the first half of the year but gradually warm up toward the end of the year.

Up through July, it seemed to fit the economy like a tee; then August came and the subprime fallout threw an ice cube into Goldilocks’s porridge.

Reflecting on that article a year later, I can’t help but say: I should have seen it coming. When you have an economist at a top bank like Wachovia tell you that their models point to the (then inverted) yield curve flattening and maybe turning slightly positive toward the end of the year, it behooves you to connect the dots: millions of dollars of subprime mortgages with ARM’s + rising interest rates = rising defaults in 2007. And if that happens, of course mortgage-backed securities - never mind if they’re triple AAA rated - are going to plummet in value.

In retrospect, I can’t help but regret that I didn’t put those questions to my sources. Part of the learning curve, though, is recognizing what questions to ask and when to ask them.

I’ve learned my lesson. I hope investors everywhere have, too.

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