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The Big Short: Inside the Doomsday Machine by Michael Lewis

Author Michael Lewis in his book The Big Short: Inside the Doomsday Machine (2011) narrates his experience as a Wall Street insider for a time period spanning over 20 years highlighting fallacies of newer financial products like subprime mortgages, collateralized bond obligations (CDOs), credit default swaps (CDS) introduced by financial houses starting from the 1980s and popularized vigorously during the 1990s and the first decade of this century in the run up to a terrible economic recession beginning 2008. More importantly, Lewis takes through the Wall Street culture of refusing to handle or admit a problem. Read More …

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Why share trading not a zero-sum game?

Traders provide value to investors as trading makes a stock liquid, helping stock price reach closer to its intrinsic value. Suppose there is no trading for Google and a particular investor wants to exit. He/she may have to sell at a discounted price, lower than the intrinsic value of the share. In the worse case, he/she may not be able to sell at all on a particular day! What happens if you need to sell your home and do not find a buyer? You have to sell at a reduced price. But if there are a large number of buyers, you will be getting a value closer to its value based on the location, amount invested in furnishing. Read More …