The Big Short and Financial Innovation
The most innovative product for a financial firm is one that always has volume and, sometimes, always has volatility. Many investors would prefer neither, they would prefer their investments boring. So there’s a clash here.
Similar sentiments were what I gathered from my reading of The Big Short by Michael Lewis. While there was a lot of common sense ignored in some of the large investment firms, it seems that the more transactions you can skim fees off of the better (if you’re a banker) and little thought was placed on the outcome or the quality of investment vehicle.
To me, I take the Warren Buffett philosophy on investing when I think of finance; it should be boring.
Tags: finance, investing, michael, michael lewis, money, warren buffett