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Archive for December, 2015


2015 in review

The WordPress.com stats helper monkeys prepared a 2015 annual report for this blog.

Here’s an excerpt:

The concert hall at the Sydney Opera House holds 2,700 people. This blog was viewed about 24,000 times in 2015. If it were a concert at Sydney Opera House, it would take about 9 sold-out performances for that many people to see it.

Click here to see the complete report.

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I collected some quotes from the books that I read and some quoted not so professionally you might like them:-blog

  • Associate to Analyst: “My Tuesday night is your Friday night.” ED to Associate: “My bar tab is your pay check.”
  • The challenge is not to manage time, but to manage ourselves.” – Steven Covey
  • When it doesn’t matter how much the drinks cost, it’s always happy hour.
  • One machine can do the work of fifty ordinary men. No machine can do the work of one extraordinary man.” – Elbert Hubbard

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The Big Short

The book is a fabulous read because of its simplicity. It’s not just for finance geeks; rather the stuff narrated

by Michael lewis is easy to digest. Although I still believe Liar’s Poker was one of the best work by Michael, but the Big- short seems to me is one of the best journalism written on the subprime crisis.

The reason I recommend to read the book because the movie is out on December 23rd and I still doubt people will follow. It has more characters and the derivatives, CDS market is not easy to understand .

The book is more focused on the vulnerability of the subprime crisis,how the big guns shorted the subprime market making it worse as they  provided the fuel which kept the subprime mortgage furnace burning even when the US was running out of new junk mortgages to write. The book quotes an example of a Deutsche bank trader Greg Lippmann ended up making billions of dollars for his employer — not to mention a $50 million bonus for himself — by aggressively going out and finding fund managers to put on the short bets needed to keep the market ticking.

How the Govt agencies Fannie and Freddie started accepting increasing amounts of subprime paper. Then banks started selling private-label subprime CDOs directly to investors, bypassing the GSEs; a lot of the profits in that activity came from taking the unattractive lowest-yielding tranches and insuring them with AIG.

In the process AIG was over leveraged it was not selling Credit default swaps any more. But then it gave rise to the synthetic subprime CDOs which were bought by Greg Lippmann sold by the banks.

This was the market with almost no pricing transparency in the secondary market: because all securitization deals are unique, the only way to get a feel for the health of the market is by looking at where primary deals are pricing. Whenever anybody said that the marks being put on subprime assets by banks and hedge funds were delusional, it was easy to point to the booming market in synthetic subprime CDOs to prove them wrong. No one, of course, remarked on the irony that the synthetic subprime CDO market was only booming because John Paulson and others were providing a huge amount of demand for bearish bets.

 

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