I was completely blown away when I watched The Big Short. it seems almost surreal that such financial instruments even exist. you are not investing in something physical, you are literally investing in the confidence of people paying, you make money when others simply honour their commitments. Human Imagination is scary.
Basically , mortgage rates have reached their highest point since 1998, spanning 25 years. Considering inflation trends, there's potential for them to rise even further. Just a year ago, a 28year fixed rate was only 6%. This prompts the question: should I wait for a housing market downturn before buying or shift my focus towards the equity market?
I think investing was simpler in the 70s, but it's more complex now. Those consistently profiting today are usually professionals. That's why I've had an advisor for 7 years to steadily grow my retirement portfolio.
My CFA, Stacey Lee Decker, is highly esteemed for her proficiency and deep expertise in the financial market. She possesses an in-depth knowledge of portfolio diversification and is considered an authority in this field.
Great job with the video, breaking it down and giving right examples. I had about 20% understanding of what happened but now I think I am at 75%. Thanks!
I've watched a few videos about this subject, and yes I understood the basics and the background, but man your explanation was as simple and sharp as it gets. Very well done! I had no way of leaving this video without subscribing.
Best explanation on the 2008 crash and the different components that lead to and impacted the crash. I needed to explain this to someone and was looking for a simplified way to explain all of it. Now, I can just share this video with them.
Having watched several videos about MBS, I think this video is one of the best. The detailed explanation about MBS, CDO Collateralized Debt Obligations and Credit Default SWAPS is great!
I never comment on videos, but I've watched about 100 videos on this understanding nothing, while you sir just made me understand the whole movie in 20 minutes! KUDOS!
It wouldn't be justified if i dont drop this comment. I've seen several videos on this topic. But this video's explanation is mind blowing. Crystal clear and pitch n perfect. Thank you very much. You're great. Hats off to you.
Amazing, clear and concise explanation! Many people are blaming MBS's and CDS's for the 2008 financial crisis, but do you think the crisis could have been avoided if the rating agencies rated the MBS's correctly such that the CDS's for senior tranches would be priced higher to reflect the increased risk?
Seriously even I'm here after watching the movie Big Short, as I'm not from US, I couldn't understand most of the financial terms used in the movie, but now I know what MSB is all about, thanks to you.
If I understand the 2008 crisis correctly, the same banks who made the bad loans (and got them rated triple A) also bought CDS on those mortgages. It was a double swindle. Not only did they knowingly make and sell terrible loans and lie about it, they also bet against their own product (the MBS) by buying CDS.
Not exactly. The big investment banks buy those bad loans (subprime mortgages) from the mortgage lenders, package them into MBS, and sell them to investors (mostly institutional investors). Then they take out CDS against those MBS.
This video was well- explained and well-thought. I have learned a lot in a short video, plus your sequence of your explanations were clear and made perfect sense throughout. I salute you for a video well done!!!
Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
@@maryHenokNft Please tell me how can I connect to your advisor. My funds are being murdered by inflation, therefore I'm looking for a more profitable investing strategy to put them to work.
I’m guided by *Mary Onita Wier* An experienced coach with extensive financial market knowledge. While you can consider other options, her strategy has yielded positive results for me. She offers valuable insights, including entry and exit points for the securities I concentrate on.
I appreciate the information. I did my own research, and your advisor seems to possess a great deal of expertise and knowledge. I've reached out to her via email and scheduled a phone call. I'm impressed by her expertise, and I'm looking forward to our discussion.
Ur just amazing you helped me alot with my homework and with understanding the big short ...keep ''learning things'' as u love to do and keep informing the new students with you amazing summaries ..Regards from middle east
Great explanation. However, you left out the fact that it wasn't just the banks that loosened their guidelines to make more money; the government forced them to loosen guidelines to allow lower income ppl obtain loans. This produced a massive amount of risky mortgages. There was blame all around.
Loved this video...watched this after "The Big Short" and it made everything clearer. Just one nitpick. At around 19:30 we say that a 500% increase of $100 is $500. Correct me if I am wrong but I believe it should be $600 ( using % change = (new - old) / old *100 with old = 100 and % change = 500). Am I missing something?
Thank you for giving insight wheb you said the credit default swaps "Short" the market. In the next statement, you now explain what that means. Nobody ever explains "shorting" means. Thanks for keeping it really down to earth.❤❤❤
Hello, Could anyone please explain the calculation of interest at 14:09 for Senior ,Mezzanine and Equity? I understand we get the interest $5/4 but when i expand the $5m and divide it by the number of shares i am getting different numbers. Also when i divide $5m by 3 i am not getting the same number as shown in the video? Thank you!
I am not based in US but I remember the 2008 crisis. That was the year I married. I never understood how it happened. This really made it easy to understand. Thanks
help me understand this.. if borrower were not actually able to pay back their loan, then mbs investor had to suffer,, but they had the security in their hand,, couldn't they just sell the mortgage?
Great explanation! It would be great if you could talk about some of the other issues around mortgagees, around MBSs, CDOs and CDS's. a) Who ends up keeping track of (servicing) mortgages and making sure the right people are getting paid? This sounds trivial but it seems like it could become increasingly complex and expensive. When the mortgages are securitized and chopped up, etc., how can they keep all this straight? And who keeps all this straight? b) In the Big Short, they kept saying "and then the entire [bond/CDO] goes to zero." What does this mean if there are still mortgages that are not in default (which was how you showed it in this video)? c) Not explained here, but in the Big Short they talked about "synthetic CDOs" as side bets on CDOs, etc. Whose money funded those side bets? How did this affect financial markets, perhaps globally? d) Not explained here, what about the insurers who (I guess) were selling the CDSs (or buying the other side of CDSs sold by the banks)? And reinsurers. How did this work in reality? (Personal note: I lost a ton of money because I was holding the bluest or bluechip stocks at the time - AIG.)
So, institutions and organizations bought securities which were backed on the assumption that housing prices would have kept increasing while homeowners would be able to pay for their homes. So they basically played a bet on people buying homes for profits. If that isn't ethical business conduct, I don't know what is. This is a great video, and more people need to understand what happened in 2008 because they would understand just how greedy businesses can become for profits and revenue.
It's crazy. I'm learning all about this to buy my first investment property but the more I look into things the more I realize we are trending into another crash.
I paid up all my mortgages in 2yrs while working with a Financial Adviser. I’m 50 and my husband 54 we are both retired with over $3 million in net worth and no debts. We got to realize that the secret to financial freedom is making better investments.
@@martingiavarini Catherine Morrison Evans is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
@@bob.weaver72 Benevolence, this reference seems valid.. Just inputted her full name on my browser and found her site without sweat, 20 years of experience is certainly striking! very much appreciate it
5:19 'They' will pay back their initial loan amount- meaning, the 'borrowers' whom pay their mortgage over 30 years will cover the initial $100,000000 that the investment back paid for all of the mortgages from the originator (bank no 1)
@@ConcerningReality I'm Trainer too, and I was surprised to see most of the story i created for my presentation at work is the same.. Infact the way how you connected the entire story is amazing... Appreciate it... Looking forward to more such financial jargons used, explained beautifully with stories... Kudos!
What happens to ownership or the title to the underlying asset, in this case the house. Who is the registered owner of that? And if it stands as collateral for the loan then does that collateral obligation (I'm assuming I'm using that term correctly here) transfer to the bundle of loans that make up the mortgage backed security (MBS). In essence, if people default on the loans do the parties holding the MBS own the real estate.
If the houses foreclose, the MBS company handles the sale and gets back the money they can from that sale. That money is then distributed to the holders of the MBS. Good question, it’s the one thing I left out of this.
Actually no one should be selling one's private property unless they have the deed to do so. It goes against your inalienable right to liberty and pursuit of happiness. Fiat can't purchase anything legally any way. One big fat lie and fraudulent actions such as foreclosures is an atrocity to the human race. All lying demons need to tell the whole truth on how crooked this financial system is
I was completely blown away when I watched The Big Short. it seems almost surreal that such financial instruments even exist. you are not investing in something physical, you are literally investing in the confidence of people paying, you make money when others simply honour their commitments. Human Imagination is scary.
Hands down the best and most simplified explanation of this content I've seen. Brilliant job.
Thank you!
Best 10 min I spent all month
20 min. When I wrote the comment I was half way 🤭
well done dude,now i can understand it,i was confused when i watch the big short for the first time due to its complex terms.
Thanks! Me too, I try to make videos about things I want to learn better, in hopes that it benefits other people too!
Same thanks for making this video
Basically , mortgage rates have reached their highest point since 1998, spanning 25 years. Considering inflation trends, there's potential for them to rise even further. Just a year ago, a 28year fixed rate was only 6%. This prompts the question: should I wait for a housing market downturn before buying or shift my focus towards the equity market?
The stock market follows a similar pattern, in order to sustain profits, it's crucial to possess a deep understanding of the market.
I think investing was simpler in the 70s, but it's more complex now. Those consistently profiting today are usually professionals. That's why I've had an advisor for 7 years to steadily grow my retirement portfolio.
My CFA, Stacey Lee Decker, is highly esteemed for her proficiency and deep expertise in the financial market. She possesses an in-depth knowledge of portfolio diversification and is considered an authority in this field.
Fascinating. I'm currently on her webpage, conducting my research. She appears to be quite skilled. I've sent her an email and scheduled a phone call.
Go all in to Bitcoin
This video is like a compulsory trailer for The Big Short, and I really glad that I've watched this before seeing the movie
As concise as possible, given the complexity... Clearly explained. Great video!
Thank you! It’s crazy that it takes 20 minutes to break down one of the simpler forms of financial securities 🤣
I came here in order to understand the movie THE BIG SHORT
Watch the movie Margin Call if you haven’t already.
Same
Me too 😫
Same bro
And I just started work in on of the lenders bank because of that lmao drip swag
Same
Great job with the video, breaking it down and giving right examples. I had about 20% understanding of what happened but now I think I am at 75%. Thanks!
I've watched a few videos about this subject,
and yes I understood the basics and the background,
but man your explanation was as simple and sharp as it gets.
Very well done!
I had no way of leaving this video without subscribing.
Thank you!
Best explanation on the 2008 crash and the different components that lead to and impacted the crash. I needed to explain this to someone and was looking for a simplified way to explain all of it. Now, I can just share this video with them.
Having watched several videos about MBS, I think this video is one of the best. The detailed explanation about MBS, CDO Collateralized Debt Obligations and Credit Default SWAPS is great!
Thank you!
I never comment on videos, but I've watched about 100 videos on this understanding nothing, while you sir just made me understand the whole movie in 20 minutes! KUDOS!
Thank you! So glad it was helpful.
It wouldn't be justified if i dont drop this comment.
I've seen several videos on this topic. But this video's explanation is mind blowing. Crystal clear and pitch n perfect. Thank you very much. You're great. Hats off to you.
This video is so underrated in term of views. Well done, you just make it easy to understand.
Thank you!
One of the best quality videos on youtube.
Thank you! This one took forever to make.
Amazing, clear and concise explanation! Many people are blaming MBS's and CDS's for the 2008 financial crisis, but do you think the crisis could have been avoided if the rating agencies rated the MBS's correctly such that the CDS's for senior tranches would be priced higher to reflect the increased risk?
He addressed the conflict of interest between the credit rating agencies & and those that sold such said security
Seriously even I'm here after watching the movie Big Short, as I'm not from US, I couldn't understand most of the financial terms used in the movie, but now I know what MSB is all about, thanks to you.
Actually some really interesting stuff! Thanks for putting this together!
Thanks! Took a crazy long time to compile this information, so it's much appreciated.
If I understand the 2008 crisis correctly, the same banks who made the bad loans (and got them rated triple A) also bought CDS on those mortgages. It was a double swindle. Not only did they knowingly make and sell terrible loans and lie about it, they also bet against their own product (the MBS) by buying CDS.
Correct! Pretty crazy.
Actually you don't know it correctly if you think big banks make bad loans all on their own.
Not exactly.
The big investment banks buy those bad loans (subprime mortgages) from the mortgage lenders, package them into MBS, and sell them to investors (mostly institutional investors). Then they take out CDS against those MBS.
Your way of explaining is simply indescribable ....amazing work brother! Respect!❤️
Amazing quality you're on the road to a million subs
Thank you!
bro such a simple and effective explanation.Nice work
This video was well- explained and well-thought.
I have learned a lot in a short video, plus your sequence of your explanations were clear and made perfect sense throughout.
I salute you for a video well done!!!
Utterly enjoy this video. Simple and easy to understand.
I dont know how to praise you for such an incredible video. Explanation at its best you deserve an award in this category.. great job 👏👏👏👏
Just one word for the efforts you've put into making this video. WOW !
This was a really well out together video. I'm watching this after watching the big short and now I understand the movie so much better
Thank you!
Chutiya ab dekh Raha hai
insane job.None of other videos explains in this detail the whole story.Awesome job man !
Thank you!
Not all heroes wear capes. Awsome video!
Excellent. Thanks for simple descriptive explanation, bcos this topics not easy to explain. Yet well done by you and your team.
Very good explanation, man. Congrats for the video!
Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.
If anything, it'll get worse. Very soon, affordable housing will no longer be affordable. So anything anyone want to do, I will advise they do it now because the prices today will look like dips tomorrow. Until the Fed clamps down even further, I think we're going to see hysteria due to rampant inflation. You can't halfway rip the band-aid off.
Home prices will come down eventually, but for now; get your money (as much as you can) out of the housing market and get into the financial markets or gold. The new mortgage rates are crazy, add to that the recession and the fact that mortgage guidelines are getting more difficult. Home prices will need to fall by a minimum of 40% (more like 50%) before the market normalizes.If you are in cross roads or need sincere advise on the best moves to take now its best you seek an independent advisor who knows about the financial markets.
@@maryHenokNft Please tell me how can I connect to your advisor. My funds are being murdered by inflation, therefore I'm looking for a more profitable investing strategy to put them to work.
I’m guided by *Mary Onita Wier* An experienced coach with extensive financial market knowledge. While you can consider other options, her strategy has yielded positive results for me. She offers valuable insights, including entry and exit points for the securities I concentrate on.
I appreciate the information. I did my own research, and your advisor seems to possess a great deal of expertise and knowledge. I've reached out to her via email and scheduled a phone call. I'm impressed by her expertise, and I'm looking forward to our discussion.
Wow that was great - just saw 2 other videos that didn’t really explain properly but this explained a lot -thank you !
Best explanation for technical terms in the big short movie.
This was a great coverage. Well done! Thank you.
THIS WAS BRILLIANT. YOU'RE AMAZING
THANK YOU!
Ur just amazing you helped me alot with my homework and with understanding the big short ...keep ''learning things'' as u love to do and keep informing the new students with you amazing summaries ..Regards from middle east
Amazing Video! Super easy to understand and the visuals helped a lot! This summed everything up!
Thank you!
Thanks Bade Bhai for clearing the very basic of MBS and CDO. Its time for me to re-watch Big Short, Margin Call, Inside Job. Thanks Again. Keep Going.
Amazingn content! This is the only video that helped me understand how MBS worked.
Very well explained.
This video should get much more views.
Amazing explanation! Well done sir.
Great explanation. However, you left out the fact that it wasn't just the banks that loosened their guidelines to make more money; the government forced them to loosen guidelines to allow lower income ppl obtain loans. This produced a massive amount of risky mortgages. There was blame all around.
Currently studying CFA
Thanks for explaining it
This was so helpful thank you! All makes sense now!
Amazing! Thanks for the simple explanations. Keep doing it!
Thanks, will do!
Deserves millions of views
You are awesome dude!
Wonderful explaination!!
This is an incredible video. Nice job. Super informative and easy to follow.
Loved this video...watched this after "The Big Short" and it made everything clearer. Just one nitpick. At around 19:30 we say that a 500% increase of $100 is $500. Correct me if I am wrong but I believe it should be $600 ( using % change = (new - old) / old *100 with old = 100 and % change = 500). Am I missing something?
This video was stellar! Thank you
Thank you for giving insight wheb you said the credit default swaps "Short" the market. In the next statement, you now explain what that means. Nobody ever explains "shorting" means. Thanks for keeping it really down to earth.❤❤❤
Finally I understood MBS, think you
Hello,
Could anyone please explain the calculation of interest at 14:09 for Senior ,Mezzanine and Equity? I understand we get the interest $5/4 but when i expand the $5m and divide it by the number of shares i am getting different numbers. Also when i divide $5m by 3 i am not getting the same number as shown in the video?
Thank you!
Thank you for all the examples and explanations!
Thank you for making this complicated thing simple and easy to understand great job
wonderful explanation! I finally get the core of 2008 GFC . Thx!
Thank you so much for explaining it! You have made it so much easier to understand 🙏
Excellent explanation, thanks for making this episode
I am not based in US but I remember the 2008 crisis. That was the year I married. I never understood how it happened. This really made it easy to understand. Thanks
help me understand this.. if borrower were not actually able to pay back their loan, then mbs investor had to suffer,, but they had the security in their hand,, couldn't they just sell the mortgage?
Great explanation! It would be great if you could talk about some of the other issues around mortgagees, around MBSs, CDOs and CDS's.
a) Who ends up keeping track of (servicing) mortgages and making sure the right people are getting paid? This sounds trivial but it seems like it could become increasingly complex and expensive. When the mortgages are securitized and chopped up, etc., how can they keep all this straight? And who keeps all this straight?
b) In the Big Short, they kept saying "and then the entire [bond/CDO] goes to zero." What does this mean if there are still mortgages that are not in default (which was how you showed it in this video)?
c) Not explained here, but in the Big Short they talked about "synthetic CDOs" as side bets on CDOs, etc. Whose money funded those side bets? How did this affect financial markets, perhaps globally?
d) Not explained here, what about the insurers who (I guess) were selling the CDSs (or buying the other side of CDSs sold by the banks)? And reinsurers. How did this work in reality? (Personal note: I lost a ton of money because I was holding the bluest or bluechip stocks at the time - AIG.)
This stuff is so confusing to understand, so I wish I saw this video first! Now I gotta watch the big short again to REALLY understand it.
One of the best explanation videos I've watched in a while! Keep up the Great Work!
Great video,thank you. This helped me understand a little more.
This video deserves to be standard course in schools
Amazingly explained!
So, institutions and organizations bought securities which were backed on the assumption that housing prices would have kept increasing while homeowners would be able to pay for their homes. So they basically played a bet on people buying homes for profits. If that isn't ethical business conduct, I don't know what is. This is a great video, and more people need to understand what happened in 2008 because they would understand just how greedy businesses can become for profits and revenue.
It's crazy. I'm learning all about this to buy my first investment property but the more I look into things the more I realize we are trending into another crash.
Thank you for making this video. Now I understand the bigger picture of MBS. Again thank you 💯💯💯
I paid up all my mortgages in 2yrs while working with a Financial Adviser. I’m 50 and my husband 54 we are both retired with over $3 million in net worth and no debts. We got to realize that the secret to financial freedom is making better investments.
That is so amazing, I’m trying to get onto the investing ladder at 40. I wish at 55 I will be testifying to similar success..
How can I reach this adviser of yours? because I'm seeking for a more effective investment approach on my savings
@@martingiavarini Catherine Morrison Evans is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
@@bob.weaver72 Benevolence, this reference seems valid.. Just inputted her full name on my browser and found her site without sweat, 20 years of experience is certainly striking! very much appreciate it
Beautifully explained! Thank you!
Thank you so much!! Very helpful especially the oversimplified calculations:)
Glad you enjoyed it!
Very helpful and well prepared. Thank you so much.
Glad it was helpful!
Thank you so much. Explained the concept in the finest way.....thank you.
Thank you! Great job explaining.
You are amazing. I understood everything pretty clearly. Thanks a lot 🙏
Great video. Very well explained. Thanks!
This explanation was brilliant
Phenomenally explained. Many 🙏 thanks
Very helpful video! Thanks!
Phenomenal video!
Nicely explained!
thank you so much for the video .. you explained it so much better .. others just confused me
terrific video
Great video
Great video! Well done!
Nicely done!
Amazing explanation, thanks for that! What still baffles me is how it was possible (maybe it still is), to buy insurance on something you don’t own?
5:19 'They' will pay back their initial loan amount- meaning, the 'borrowers' whom pay their mortgage over 30 years will cover the initial $100,000000 that the investment back paid for all of the mortgages from the originator (bank no 1)
Best explanation ✅
this was great! thank u
Excellent quality video
Brilliant explanation
Amazingly explained....
Thank you!
@@ConcerningReality I'm Trainer too, and I was surprised to see most of the story i created for my presentation at work is the same.. Infact the way how you connected the entire story is amazing... Appreciate it... Looking forward to more such financial jargons used, explained beautifully with stories... Kudos!
This was great...wouldn't it be helpful to think of MBSs as bonds rather than equity? The equity framing makes it a little confusing
Tey were bonds only but sold as equities. Even conventional Govt Bonds are sold like equities.
"Greed is good" - 😁 ... your explanation is much appreciated!
What happens to ownership or the title to the underlying asset, in this case the house. Who is the registered owner of that? And if it stands as collateral for the loan then does that collateral obligation (I'm assuming I'm using that term correctly here) transfer to the bundle of loans that make up the mortgage backed security (MBS). In essence, if people default on the loans do the parties holding the MBS own the real estate.
If the houses foreclose, the MBS company handles the sale and gets back the money they can from that sale. That money is then distributed to the holders of the MBS. Good question, it’s the one thing I left out of this.
Concerning Reality great channel. Assumed you were well over the 100k subs mark. I guess it’s just a matter of time. Thanks for the content. 🙏
@@Kudatr literally was thinking the same thing
Actually no one should be selling one's private property unless they have the deed to do so. It goes against your inalienable right to liberty and pursuit of happiness. Fiat can't purchase anything legally any way. One big fat lie and fraudulent actions such as foreclosures is an atrocity to the human race. All lying demons need to tell the whole truth on how crooked this financial system is
A well done video and explanation, I’ll never invest in MBS in principle of risks and loan should alway being in the banks, never in a shell company.
I finally understood it. 😃😃😃😃😃😃😃😃😃😃😃😃thank u sir.❤❤
Great content.
Can you explain how the SPV or the second bank gets profit if they sold them as bonds instead of shares ?