Quotes About Risk

Investing well was all about being paid the right price for risk.

The purpose was to extend credit to less and less creditworthy homeowners, not so that they might buy a house but so that they could cash out whatever equity they had in the house they already owned.

the Wall Street firm became a black box. The shareholders who financed the risk taking had no real understanding of what the risk takers were doing, and, as the risk taking grew ever more complex, their understanding diminished.

To Danny and Vinny, Greg Lippmann was a walking embodiment of the bond market, which is to say he was put on earth to screw the customer. Three

The more egregious the rating agencies' mistakes, the bigger the opportunity for the Wall Street trading desks. In

Send me a list of the 2006 deals with high no-doc loans." Eisman, predisposed to suspect fraud in the market, wanted to bet against Americans who had been lent money without having been required to show evidence of income or employment. "I figured Lippmann was going to send me deals that had twenty percent no docs. He sent us a list and none of them had less than fifty percent.

2005 there would be $625 billion in subprime mortgage loans, $507 billion of which found its way into mortgage bonds. Half a trillion dollars in subprime mortgage–backed bonds in a single year.

When you borrow a lot of money to create a false prosperity, you import the future into the present. It isn't the actual future so much as some grotesque silicone version of it. Leverage buys you a glimpse of a prosperity you haven't really earned.

The market might have learned a simple lesson: Don't make loans to people who can't repay them. Instead it learned a complicated one: You can keep on making these loans, just don't keep them on your books. Make the loans, then sell them off to the fixed income departments of big Wall Street investment banks

The very first day, we said, 'There's going to come a time when we're going to make a fortune shorting this stuff. It's going to blow up. We just don't know how or when.

As a rule, any loan that had been turned into an acronym or abbreviation could more clearly be called a "subprime loan," but the bond market didn't want to be clear.

It took us weeks to really grasp it because it was so weird," said Charlie. "But the more we looked at what a CDO really was, the more we were like, Holy shit, that's just fucking crazy. That's fraud. Maybe you can't prove it in a court of law. But it's fraud." It

The main effect of turning a partnership into a corporation was to transfer the financial risk to the shareholders. "When things go wrong it's their problem

In my entire life I never saw a sell-side guy come in and say, 'Short my market

He explained that the rating agencies were morally bankrupt and living in fear of becoming actually bankrupt.

For example, if you want to know the likelihood that the geese loitering near the LaGuardia Airport runway will cause your plane to crash-land in the Hudson River and the event will become the subject of a major motion picture, you go to see the undersecretary or deputy undersecretary for marketing and regulatory programs, which oversees the Animal and Plant Health Inspection Service, which handles the bewildering set of conflicts in America between people and animals.

Silicon Valley in the late 1990s was the closest that business has ever come to resembling a child's chemistry experiment.

He didn't buy U.S. Treasury bonds, or stock in companies outside of Silicon Valley, or for that matter stock in anything outside the outrageously volatile Internet sector.

A year or so before he had bought and sold a million shares in @Home, and made a quick $45 million.

Never was a man's love of risk so beautifully amplified by his environment as Clark's was in Silicon Valley.

You invite a few players in to start a game of Texas Hold'em by telling them that the deck doesn't have any jacks or queens in it and that you won't tell the other people who come to play with them. How do you get people into the casino? You pay the brokers to bring them there.

Danny pensaba que la inmensa mayoría de la gente del sector estaba cegada por sus intereses y era incapaz de ver los riesgos que había creado.

It was an argument about the precautionary principle v. the scientist's desire not to make a mistake, coupled with risk aversion that was all too characteristic of public health bureaucrats. It was literally driving Carter nuts.

People's emotional response to extremely long odds led them to reverse their usual taste for risk, and to become risk seeking when pursuing a long-shot gain and risk avoiding when faced with the extremely remote possibility of loss. (Which is why they bought both lottery tickets and insurance.)