[jyl]

Tricky position, Rick, but sounds like you are reasonably well-placed in terms of options, at the moment anyway. Which is a credit to your work at your former job, your care not to burn bridges, and probably to your overall character which your old boss probably got to know reasonably well.

Okay, so the options are (1) stay at current company, (2) return to old company, (3) find a new company, (4) exit job market for a while (return to school, take a year off, whatever).

Obviously the other dimension is how quickly you make the decision. Might not have much choice about that one.

So, to consider option (1) you must make an informed bet that (A) the subprime market will come back, that (B) you're financially and emotionally able to hold on until it does, and that (C) by holding on through the downcycle you'll be much better positioned in the next upcycle than you are today. The last part (C) is important, otherwise you might as well do something else in the meantime.

I went through something similar in the stock market, entered in 1998/99, market and industry started imploding in 2000, our compensation was slashed, everyone was cutting heads. In my company, almost half of the analysts (my role then) were laid off, and some of them were still unemployed 1+ year later. I decided to stick it out, things have worked out (knock on wood).

I saw this happen with real estate lawyers in Southern Calif in the 1990s, around 1990 when RE market busted (and that included commercial) there was no work for my firm's RE lawyers, most of the younger associates (1-3 years out of law school) switched (or were switched against their will) to other practice areas. But a handful stuck it out. By 1996/7 the RE market (commercial) was back and there was a real shortage of senior associates in RE law. Those few left all started making lots more money and accelerated into partnership.

But the subprime market won't necessarily behave like the stock market or the SoCal RE market.

Are you able to do some serious research into the subprime market? Why is it tanking? What is the outlook for those factors? Has it been a cyclical market in the past? How long were those cycles? What is different/same now? Is there a secular (i.e. lasting, not cyclical) change occurring in the industry structure, legal framework, underlying demand/supply? In the next upcycle (assuming you decide it is cyclical) will the business be as profitable as this cycle? Will guys like your boss be making $600K/yr again? What are your chances of being in that role, and making that kind of money?