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Amateur Investors
I had to double check the date Against The Gods was published. In the chapter, 'The Fantastic System Of Side Bets', which I missed the last time I read this book, is a small foot note that I have reproduced below:
"Most individual home mortgages are packaged with other mortgages and sold off in the open market to a wide variety of investors. In effect, the bankers have traded off the risks of prepayment to a market more willing to bear that risk; these mortgage-backed securities are complex, volatile, and much too risky for amateur investors to play around with."
I was under the impression that the present crisis was due to an instrument of a more recent origin. Evidently I was totally wrong. Against the God was published in 1996.
I wonder who Bernstein thinks are "amateur investors".
http://churn-news.blogspot.com
"Most individual home mortgages are packaged with other mortgages and sold off in the open market to a wide variety of investors. In effect, the bankers have traded off the risks of prepayment to a market more willing to bear that risk; these mortgage-backed securities are complex, volatile, and much too risky for amateur investors to play around with."
I was under the impression that the present crisis was due to an instrument of a more recent origin. Evidently I was totally wrong. Against the God was published in 1996.
I wonder who Bernstein thinks are "amateur investors".
http://churn-news.blogspot.com
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