Archive for November, 2008
Welcome back Franco fan! Please share your thoughts and leave some comments!
It’s that time of year again…time to camp out in sub-zero (unless you live in a warm weather state) temperatures on the rock hard concrete to grab the door buster sales at your favorite retailer. For those that haven’t partaken in this glorious ritual, I highly recommend it (actually, I highly recommend getting your little brother to do it while you sleep in a nice warm bed and then swoop in as the doors open to save big bucks on a new flat screen TV…thank little bro!). For those that would like to get a jump start on the process and map out the best deals at each store, check out this thread at Fat Wallet for scanned copies of all the upcoming Black Friday ads. Happy Thanksgiving!
Franco
In response to continued requests about recommended readings and websites, I’ve created a dedicated page for Franco’s Favorites. Check it out.
Franco
In the first two parts of this series, we covered the rise of securitized loans and birth of credit default swaps. We left off in the throngs of a raging bull market being driven by a new era of technology companies. With the exception of a few hiccups, Wall Street has perpetuated almost 20 years of wealth creating, bull market returns on the backs of financial leverage, innovation, and good ol’ fashion greed.
Anyone who has read Liar’s Poker (and even those who have yet to read it) will enjoy this recently penned article by Michael Lewis. In it, he explores the mortgage market meltdown through the eyes of a bearish hedge fund manager and revisits the synthesis he drew from his brief stint with Solomon Brothers in the mid 80’s. I recommend both the article and his book for a “colorful” look at some of the inner workings of the US financial markets.
Enjoy!
Franco
We last left off with a red hot financial market in the mid 1980’s being led by the fancy MBS (mortgage backed security) and CMO (collateralized mortgage obligation) securities running in tandem with a leveraged paradise known as the junk bond market. The easy money and lavish lifestyles of the 1980’s were not isolated to Wall Street. Savings and loan (S&L or “thrifts”) institutions across the nation were taking advantage of the newly implemented Tax Reform Act of 1986. The new act was passed to update “old banking standards” and allow thrifts to take on more risk in order to better compete in the “complex financial markets” of the 1980’s. Thrifts ran with their new found freedom and grew like wild fire. Some of the more aggressive ones were doubling in size every year with less than ethical lending practices. All this easy money was making thrift executives very rich and further compounded the greed running rampant through the markets of the 80’s.
