Tuesday night I was relaxing in a friend's hot tub, sipping wine and chatting about God, politics, and the financial state of the country. It was quite a fun evening. During the course of the conversation, I had apparently spouted enough information to make my friend ask if I would blog on the current market conditions: the credit crisis, the market collapse, what the heck is a CDO, etc. It is an intriguing challenge. While I have been in banking for almost five years now, this is the first time I have even attempted to understand the compexities of investing. When you are not licensed, you can't talk about details, so I never really paid attention. I knew what to listen for when talking to a client, and how to effectively refer them to a licensed financial professional.
Well, now I am the licensed financial professional, and being new to this brokerage world, I've spent a lot of time over the past few months reading and studying, preparing for licensing exams and figuring out what to say to clients when they ask about their accounts. And so I have learned that it is a big scary financial world out there.
My first boss at the bank once said to me, "You sound really confident, even when you don't know what you are talking about." He meant it as a compliment of my ability to handle new challenges, but I somewhat feel that anything I write here about investing and finances might be an example of this "strength." Certainly there is still a lot I don't understand. But while I am not an expert, I do have a lot of research, a few personal conclusions, and some interesting articles to share.
I will start with a recommendation to read this for an interesting article that has helped me understand a lot about derivatives, structured investment vehicles, and the subprime mess. Satyajit Das has worked in this part of the industry for many years, and if you have the stomach for it, his book is considered a classic on derivative trading (I actually didn't finish it. My eyes started to glaze over after a while). But the article gives a good overview.
As I put together my thoughts on all of this stuff, I will follow up with more posts in a series I am calling "Culture of Debt". In my opinion, this latest market crisis is a symptom of the bigger problem of greed that is evident in American society. While I am capitalist to the core, I believe how we go about our finances should be something we submit to God, and living in continual debt and making money off of the weakness of others is not glorifying to God. Our ambition and use of business skills must be submitted to the lordship of Christ and His love for all people.
More to come...