Cmo Quote by Michael Lewis
““For though there was no chance of persuading a pension fund manager looking to make a longer-term loan to buy a Freddie Mac bond that could evaporate tomorrow, one could easily sell him the third tranche of a CMO.””
About This Quote
Source Book: “The Big Short”, Michael Lewis, 2010
Complex financial deals can be sold to uninformed managers, highlighting risk and opacity.
In simple terms: Financial jargon can mask risk.
Key Takeaway
Scrutinize complex financial products.
Themes
finance
risk
communication
Mood
cautious
analytical
Type
educational
critical
When to use this quote
- investment decisions
- corporate finance
- risk management
Key Concepts
financial engineering
information asymmetry
Questions to Reflect On
- What red flags do you look for?
- How can transparency be improved?
A Different Perspective
Complexity can obscure true risk.
![“These Ginnie Maes suck. They get longer [in maturity] when rates go up, and shorter when rates go down, and nobody wants them” quote by Michael Lewis](https://sms4smile.com/quotes/img-quotes/9e2/michael-lewis-705_mortgage-bonds_these-ginnie-maes-suck-they-get-longer-i_1519459.jpg)
![“Crucial decisions are made, today as thousands of years ago, in terms of the intuitive guesses and preferences of a few men in positions of authority...[it is] quite likely that the fate of entire societies may be sealed by a series of avoidable mistakes committed by their leaders.” quote by Michael Lewis](https://sms4smile.com/quotes/img-quotes/a59/michael-lewis-705_decision-making_crucial-decisions-are-made-today-as-thou_16888.jpg)
