Archived threads in /biz/ - Business & Finance - 5909. page

>>1842183
So essentially mortgages are (were) considered very safe credits to hold, because people prioritized paying their mortgage over all other daily expenses so defaults on mortgages that were decently rated were very rare. In the 70s, a guy introduced the Mortgage Backed Security, which is a tradeable financial instrument that uses the debit safety of mortgages to essentially give it value/stability. This is the historical background scene in the big short where a guy invents these and sells them to a pension fund.

Over time these MBSs were collected into Collateralized Debt Organizations, which were essentially massive bundles of these securities that would be traded at once. These CDOs had ratings given to them that were an aggregate of the ratings given to each mortgage, for example, AAA or A or BBB, etc. Typically a highly rated CDO would contain a fair number of low rated securities, but the default rate on AAA and AA bonds was so incredibly low that they were considered safe. Now a lot of firms traded, owned, and particularly had large leveraged (borrowing money to invest) positions on these CDOs.

The major market error was essentially vastly underestimating the default risk on these instruments. This is a vital area, in fact, entire departments are devoted to Risk Management and some of the most prestigious quantitative jobs on wall street are in RM. In the big short, several market actors realize this discrepancy in risk valuation and exploit it in different ways: the two young guys, with small amounts of capital, purchase Credit Default Swaps, which are instruments allowing them to essentially take out insurance on these mortgages (that they don't own). Typically a credit default swap would be used by a firm that owns large numbers of CDOs to hedge itself: they pay a little bit of money in exchange for the assurance that if the mortgages default, they will be paid back from whoever they purchased the swap from.

>>1842201
(2/2) The novelty in the young guys' approach was basically to buy these swaps as an investment vehicle. Usually they are low volatility, not a speculative position, and purchased like I said by extremely high net worth firms as a way to just eliminate risk. But they realized that the swaps were the best way to profit off of the impending crash, since they could not do what Michael Burry did, which is have other institutional investors write instruments for them allowing them to short the market (they didn't have an ISDA, which is necessary to do this). What Burry did was go to a bunch of banks and get them to write him contracts saying every month he would pay them the difference between his position and the value of the CDOs he was shorting, but then he would be paid off massively if they dropped below his entry point. (This is a simplification but it's what the result of the instruments was so it doesn't matter).

Now another plot point is the Steve Carrel character, who uses his firm (fuckload more money than the young guys but less money than Burry by a fuckload) to buy instruments shorting the entire CDO array of mortgages: BBB, BB, other low quality bonds, but insightfully (this is the scene where Ryan Gosling plays with Jenga blocks) realize that the failure of these bonds will have a cascading effect and also cause the A,AA,AAA bonds to default. And they can get a really really good deal on shorting these bonds, because everyone thinks they are virtually risk-free. In buying these instruments, they don't realize who exactly is selling to them. At the end of the movie, it is revealed that Merrill Lynch has also realized the risk valuation discrepancy from the beginning, but only has short positions on the LOW rated bonds, and in fact financed these short positions with the sale of long positions, to Steve Carrel's character and others, on the HIGH rated bonds. Hence when the low rated bonds fail, the high rated bonds also fail, and Merrill Lynch

>>1842183
suffers enormous losses. The leveraged positions on these CDOs also wipe out other firms (that failed to reorganize their positions fast enough) such as Lehman Brothers. Goldman Sachs is an example of a firm that, while suffering enormous losses, managed to essentially reorganize fast enough to mitigate complete bankruptcy. This is even included in the movie: the indian goldman sachs rep contacts Burry to negotiate payment on his instruments, and Burry accuses him of only deciding to call and realize those positions when Goldman Sachs has achieved a 'net short position' i.e. has reorganized their investments enough that they now profit from the decline of the housing market as opposed to their, and everyone else's, original long positions.

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>>1841988
Because I'm waiting for it to bottom out

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>>1841988
But I do. I only wish I could buy more.

>>1841988
wont let me buy it in new york

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Network engineer here
Thinking of going back to school at 29 and learning to weld and getting a shop/construction job where my skills can be used and noticed. The IT world sometimes sucks, or it might be the shitty company I work for


>I kind of hate the corporate world and am tired of it

>bump

Went for hvac became a truck driver kek

>>1841875
>community college
>social gains

man you're up for a brutal reality check

>>1841878
:(

>>1841875
better to go to college late than die without a degree

Why would it get approved? ETH is buggy vaporware. This would make some sense if POS was established, but even Buterin admits this will happen by late 2017 in the most optimistic scenario. Also, it is more likely than not that the BTC ETF will be dismissed, so I wouldn't hedge too much on that either.

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>>1841871
Eth moon mission may take a year or 2 it's a long play like BTC was (pic related)

>>1841959
EXCEPT BTC WAS NEVER A GLITCHY PIECE OF GARBAGE, AND WAS AN ACTUAL FINISHED PRODUCT, UNLIKE ETH!

>>1841802

there's literally one piece of paperwork to start a company in the UK

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At least you can get a job. I hate minorities, women, and lgbt

When did i flip timelines to 2010

>>1841682
Kek

>>1841682
Most of the "groups" made and similar ideas have no organization or concept, just people shilling their shit by spamming the chat. That's not what I'm talking about.

>Finance question
You lost me there buddy

>>1841616
is finance an actual university major? never knew that

>>1841616
use excel then work out the solution

>>1841612
I'm socially avoidant and anxious so I can't communicate well with others. Makes it quite hard to establish a business unfortunately.

i have no money for that great business idea i had

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I had no great idea for that business

Post strats. Also, which gambling games have the best odds/strategy to them?

>>1841594
Well you obviously aren't in practice mode,but I'll bite, which hands do you play? Wizard of Odds says raise on Q-10-6 or better, assuming the most common pay table (which has a 3.37 percent house edge).
>>1841600
Best odds are blackjack, the free odds bet in craps (which requires a pass/come or don't pass/come bet) or the best pay tables in video poker.
The last is probably the most consistent advantage play if you can learn to play quickly, play perfectly, and analyze slot club promotions, which takes a touch of autism and you'll still only make a shit wage per hour. Read Bob Dancer if you're still curious.
It's good to know how to look for the best games but only so your gambling entertainment dollar stretches further, don't expect to make a living at any of these going against the house (save for live or online poker against other people l, but that's a whole other skillset).

>>1841594
can you even withdraw your money ? every gambler i know just keep playing forever until he lose it all

>>1841582
We can make some assumptions about the nature of the contracts with Vanguard and Exxon and crunch out some conclusions based on total dividend given out in the last ten years by them.

>>1841590
I've only got three years worth of history unfortunately (2014-2016). I'll post the annual dividends just in case you're still able to work with that:

VMRGX: 531.02, 212.26, 252.22
VFIAX: 1133.55, 1302.03, 1399.98
VGHAX: 1164.80, 1570.61, 951.01

If anyone wants to bother crunching the numbers on it if you're able to, feel free. I can post my exxon shit from the last few years too.

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>>1841590
XOM: 4060.80, 4331.52 4481.92

Also listed from oldest to most recent if that wasn't immediately clear

Thanks again /biz/

>>1841550

Sorry to inform you anon that time series analysis has been refuted multiple times as a mean to actually reap a consistent yield that is at least equal to the market portfolio.

tl;dr invest in index fund because it's more profitable

you need the smallest tick chart

>>1841550
You don't, technical analysis is a meme that becomes self-fulfilling prophecy if it's memed enough.

>>1841495
All dem fucking lines and technicality, like nigga just buy the dip.

>>1841495
Some Japanese used to worship it so it was relevant in Japanese assets like /NKD.

Outside of that it's too complex.

I have found the cloud to act as an accurate support / resistance

Maybe its a self fulfilling prophecy but regardless you gotta trade what works

get a new phone first

>>1841476
Absolutely, you definitely have the skills and knowledge to predict and take advantage of this

>>1841476
short BTC on bitmex with all your life savings 100x leverage.. that will make you rich faster

you might be better off investing in a pair of kneepads.

>>1841469
stop buying penny stocks you poorfag

>>1841469
Delcath is shit, don't fall for it