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Tag Archive: ASSET BACKED SECURITIES


As I did a story few days back  When to sell and When to buy ?     Trying to recollect the some book rules blogfor Investments that holds true in many adverse scenarios.

As all of you must be aware of that the field of behavioral finance has helped us to understand that we don’t always make rational investment decisions.We often make poor decisions because of our biases. And the designers of structured product are well aware of these “flaws” in investor behaviour. So they structure products that exploit our flaws. Continue reading

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International Swaps and Derivatives Association is the body corporate to make over the counter (OTC) derivatives market CDSDEFAULT-1-1safe and efficient.

It has 815 members from 58 countries including global, international and regional banks, asset managers, energy and commodities firms, government and supranational entities, insurers and diversified financial institutions, corporations, law firms, exchanges, clearinghouse and other service providers.

The Key areas of ISDA are
* Reducing counterparty risk
* Increasing the Transparency
* Improve the OTC operational infrastructure.

The details are provided on the ISDA Brochure

ISDA came under criticism in 2012 on its decision that based on evidence the Greek bailout would not prompt payments on the (CDS) credit default swaps.
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September 15 2008 was one of the most extraordinary days in global financial history.A simmering credit crisis exploded into a full-blown apocalypse in the global financial sector when Lehman Brothers filed for bankruptcy.  

With assets of $639bn and a further $613bn of debts, it was the biggest corporate bankruptcy in the US. The collapse of Lehman had immediate repercussions, frightening financial markets around the world, but with hindsight its demise has come to embody the failure of investment banks to adequately assess risk and invest accordingly.

Market Performance (from the close before Lehman BK) – Silver +71%, Gold +61%, S&P +58% ( For S&P the dividend are not accounted for. Including dividend it will be close to 88%)

Here is a must watch documentary of 60 min : “The West is done, it’s over! We screwed it all up. Do you want your great-grandchildren speaking Chinese 🙂

Warren buffet: A good business that can be purchased for less than the discounted value of its future earnings.blog

George Soros: An investment that can be purchased (or sold) prior to a reflexive shift in market psychology/fundamentals that will change its perceived value substantially.

Benjamin Graham: A company that can be purchased for substantially less than its intrinsic value.

Some other examples are:

The Corporate Raider: Companies whose parts are worth more than the whole. Continue reading

Whenever the financial crisis happen the concept of bad banks becomes common. In 2009 during the sub-prime crisis so called blogLehman crisis the concept of bad banks was very famous.

As per the information from Bloomberg:

The Bank of Portugal unveiled a 4.9 billion-euro ($6.6 billion) bailout over the weekend that will leave shareholders and junior bondholders with losses, while sparing senior creditors and unsecured depositors. Banco Espirito Santo, once the country’s largest lender by market value, will be split in two, with depositors and healthy assets joining the newly formed Novo Bank while bad loans and junior creditors stay with the old bank until it can be shut down.

“To regulators in Frankfurt and Brussels, this must have seemed the safest way to isolate any residual and tail risks” related to the bank’s Angolan unit and loans to other parts of the Espirito Santo group, Citigroup Inc.
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