Be fearful when others are greedy and greedy when others are fearful. – Warren Buffett Buffett uses this mantra every day, along with his two other ground rules for running his investment firm Berkshire Hathaway: So why does the 90-year-old legendary investor hold these core mantras? One possible answer can be found by considering the history of investment bubbles. One of the first recognised “bubbles” … Continue reading Forever blowing bubbles
What are they? Collateralized debt obligations (CDO), initially created by the Drexel Burnham Lambert bank, are instruments which are formed by pooling together cash-generating assets such as mortgages, loans and other forms of debt. They are made up of various ‘tranches’ based on their respective level of credit risk. Supposedly, one diversifies their risk when buying a CDO as they have portions of high, medium … Continue reading CDOs: The genius idea that destroyed the World Economy
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