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Btw, a great, well known quote from John Kenneth Galbraith (from A Short History of Financial Euphoria) is: "The world of finance hails the invention of the wh
by em500 4y ago
Btw, a great, well known quote from John Kenneth Galbraith (from A Short History of Financial Euphoria) is:
"The world of finance hails the invention of the wheel over and over again, often in a slightly more unstable version. All financial innovation involves in one form or another, the creation of debt secured in greater or lesser adequacy by real assets."
In the 2008 financial crisis, some have paraphrased this as "All financial innovation is leverage dressed up as something different."
- lisper 4y agoThere are some useful distinctions to be made. Insurance, for example, could be seen as "negative leverage", but it really is a different kind of animal.
- shafoshaf 4y ago“I’m not so much interested in the return ON my money as I am in the return OF my money.” — Will Rogers
- deleted 4y ago[deleted]
- NovemberWhiskey 4y agoThat's actually a fascinating error that people make with fixed-income investing; too much focus on safety of principal vs. actual compounded yield and recovery rate in the case of default.
- infinite8s 4y agoCan you say more on that error?
- liamYC 4y agoIn New Zealand, most fund platforms have a custodian - an entity that holds the assets you buy on the platform. If the platform busts, you’re safe because your assets are held with the custodian and not the platform. But that then begs the question, what happens if the custodian goes bust? Well custodians also have a custodian, diversifying the risk one step further (but not completely). Custodian inception! Further on this here: https://moneykingnz.com/what-happens-to-your-money-if-investnow-or-sharesies-go-bust/ https://moneykingnz.com/what-happens-to-your-money-if-invest...
- asah 4y agoThis is just as reductionist as saying that all computers or programming languages are the same. Sure it's true at some level but not a useful distinction if you're a customer or vendor.
- didericis 4y agoIt's a useful thing to keep in the back of your head to inoculate yourself against marketing shenanigans. The basic underlying principle of a product/service should be communicable and relatively universal. The details are of how it's tailored to your specific situation should come with cons and unknowns in other situations. If it's not communicable and/or sounds like there are no cons they're not being honest about what it is (intentionally or unintentionally).