Some Great Examples of Good Investment:

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 “Some Great Examples of Good Investment:”

Book Rules for Investment

The field of behavioral finance has helped us to understand that we don’t always make rational investment decisions. We often make blogpoor decisions because of our biases. And the designers of structured product are well aware of these “flaws” in investor behavior. So they structure products that exploit our flaws.

Few points to be taken in to account :-

  • Never buy an investment product if there’s a commission attached to it.
  • Only work with an adviser who offers a fiduciary standard of care.
  • Only invest in a product if the seller can demonstrate that they also are investing in the same product.
  • Never buy a complex product; if you can’t fully understand the nature of the risks and the costs, run as fast as you can because you can be 100 percent certain the complexity is designed to favor the issuer. In other words, you’ll be the patsy at the poker table who doesn’t know he’s the patsy.

Continue reading “Book Rules for Investment”

Collateral Management simplified

If you are deployed in the Investment banking space front office, middle office or back office, you should have come across phrasesblog such as “collateral liquidity crunch” and “collateral scarcity”, and new terms such as “collateral transformation” and the “collateral upgrade trade.

Came across an interesting paper on Collateral management sharing some of the highlights, need for collateral management, how we got there, some of the Best Practices to collateral.

The 2008 financial crisis and the role derivatives played in it compelled regulators to re-examine and reengineer the entire derivatives market structure. The disruption to the derivatives market is already underway, primarily as a consequence of behemoth regulations such as the Dodd-Frank Act (DFA), European Market Infrastructure Regulation (EMIR), Basel III and others. But new global regulations are not the only driver. Continue reading “Collateral Management simplified”

No Failure Vs Orderly Failure

With all the Ukraine stuff, Missing Malaysia Airlines flight MH370, World’s biggest democracy getting ready for the exaggerate blogMelodrama and some procrastination from my side , some things got lost in my spindle.  Time to catch up 🙂

In the banking sector, which features leveraged institutions operating in a principal capacity, capital requirements are designed with the goal of enhancing safety and soundness, both for individual banks and for the banking system as a whole. Bank capital requirements serve as an important cushion against unexpected losses.

They incentivize banks to operate in a prudent manner by placing the bank owners’ equity at risk in the event of a failure. They serve; in short, to reduce risk and protect against failure and they reduce the potential that taxpayers will be required to backstop the bank in a time of stress.

Continue reading “No Failure Vs Orderly Failure”