Charles Davì

About

Exploring the least known corners of finance using common terms and common sense (and occasionally game theory).

derivativedribble [at] yahoo [dot] com

  1. Does Buffett’s PUT Sale ($4.5 bil) require any margin collateral, if out of money by a significant margin? I know it’s not exerciserable until 2019 but he is writing them market to market.

  2. I can’t see any contact details but I like the blog – and I’ve written something about it on mine, http://www.cashandburn.com – we have a similar approach!

  3. I’m getting a lot of people blaming CDO’s. Do you have anything on these instruments?

  4. Don,

    I’m working on another piece right now but I will consider writing something about CDOs.

  5. Charles, I did a post about the Michael Lewis piece on Portfolio. Did I get these correct?

    “The arrangement bore the same relation to actual finance as fantasy football bears to the N.F.L. Eisman was perplexed in particular about why Wall Street firms would be coming to him and asking him to sell short. “What Lippman did, to his credit, was he came around several times to me and said, ‘Short this market,’ ” Eisman says. “In my entire life, I never saw a sell-side guy come in and say, ‘Short my market.’ ”

    I’ve already used the football and betting analysis in my losing debate with Derivative Dribble.

    “The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs.”

    Sorry, if done right, these can be useful for determining the likelihood of default. It’s not the product. I wouldn’t do it, but I’ll use the info.

    Take care,
    Don

  6. I love the format of your website. It’s far more readable than most blogs. And of course the content is top notch. Keep up the good work.

  7. Hi Don,

    Something you need to keep in mind is that firms use financial instruments to alter the risks that their portfolios contain. That means that there are probably investors out there who are indifferent to real bonds and synthetic bonds. That is, they just want the exposure to credit risk.

  8. Just read Theory of CDS pt2. Brilliant!

    (yes, I read the others, and they’re pretty good, too. Thanks for your efforts in writing them all.)

  9. Mate – you are a genius. This blog is great and I would advise anybody starting out in the industry (if there is anyone starting out or any of the industry left) to read this.

  10. Hsin,

    Thanks for the kind words! Glad you like the blog.

  11. Excellent blog, enlightening and informative. Could you also consider writing on a related subject-bonds/interest rate swaps, etc. and in particular the affect on states, school districts,etc.? My independent research on this subject disturbing and confusing to this common taxpaying schmuck. Thanks for your good work and clear head.

  12. Quite fun snippets to read. Having just stumbled upon your blog while researching synthetic CDOs, I appreciate the links to your other articles for the background material they provide.

    You may have already read the book “Fools Gold”, which I am in the process of reading, but I have found this to be an enthralling read on the history of credit derivatives at J.P. Morgan and their role in the recent credit crisis.

  13. Hi, thanx for your post..keep up the good work

  14. Why “dribble” and not drivel?

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