YouSaid · the spoken record

Jeffrey Sherman

lines on the record: 117
first: 2024-05-30
most recent: 2024-05-30
sittings or episodes: 1
sources: podcast

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“Yeah, well, you got to rewind the clock. I mean, we were talking about year over year, you got to expand the window. So, yeah, we all look in calendar years, but let's go back to November 1. Europe meaningfully in the bond portfolio, right? Last year, right? We got a little too excited. Like, we cut a duration back in January, a little bit in our portfolio, especially on the intermediate term side. We did so because I was just adamant that JPAL was not going to let this thing keep going. We're not going to get rates down to 3% on the 10-year. It just seemed ridiculous. And that was like a”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“18, 16. Yeah, yeah, you got a little bit. And I think I said that back in the 16 era there's people out there haven't you ever seen a hiking cycle that are making investment decisions. But the thing about it is that that's why we have to be students of history, right? We have to know some of the dynamics. But I think that's a buffet quote, right? Where not Jimmy, but Warren, where he says if history was all there was or past his prologue, then the richest people in the world would be librarians, right? And so you have to have that in your toolkit. You have to have the behavioral side in your toolkit. But also, you have to be willing to kind of just think about things differently. And, you know, that's what's great about this business. And that's why I'm glad I didn't become a teacher, Barry. I teach through this, right? I try to help our analysts. I try to educate our clients. And to me, it's solving these mysteries all the time. It's way more fun than just teaching you how to do PIMDOS and figure out the order operator.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think I said something like that. I won't say there's none out there because obviously we have some 10-year, but a lot of”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I know, and you know what? It's kind of funny because these younger analysts and things, they just think it's okay to have zero real yield, like that the rate should equal inflation. And I'm like, you have to have a premium. And I think that's also what's changed is because inflation has come back into the market. The bond folks are going to require an inflation premium, which means we need real yield.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“That seems like a no brainer trade for not taking credit risk, right? Now, you know, it's kind of priced, right? Into the market. And so things aren't as exciting there. But as you look through it, I just think there was just so much fervor that everyone thinks the Fed's going to go down in rates. But as I tell people on the desk, what's wrong with yield? What is wrong with having a positive real yield?”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, you got to be careful with it because they can be problematic. But I can buy floating rate mortgages, for instance, guaranteed by the government. They've got seven caps, meaning that mortgage, you know, the rates in member, these were issued before. They would have to go up to over seven before you're penalized. They trade 100 over.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, maybe there's a thing called technology that's a little different. I don't know, but where I'm thinking about all of this is that it's not just falling the path of what the market is telling you. Because remember, the bond guys get a lot of credit for being smarter than other folks. And the bond market knows more than other markets. But remember, we're just people too. That forward curve is a bad indicator of where rates are going. It always has been. And, you know, if you think about when about that dot plot? Yeah, I mean, look at where rates were pinned down in the early 2010s through the whole decade of the 10s. The market always had hikes are coming, hikes are coming. So effectively, I thought the market got way too giddy. At this point, you know, it's harder to make a decision now because it was very easy to say, look, I want to fade the full reward. I want to continue to own some floaters in the market. There's nothing wrong with owning some floating rate debt.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“They think if you cut rates more, you fuel that again. And so that's another reason why coming into the year, I thought that we should be patient on the rate cuts. And it doesn't look that strange today, but a couple months ago, I was telling people the biggest risk to the market is that the Fed doesn't cut this year. And people looked at me like I was insane, Barry. More insane than they usually. Usually, right. Yeah, right. I mean, so there's a baseline there. I just said, why do we have to have cuts at this point? And what if the economy continues? Do you think the Fed wants the cut to have to turn around and hike again later on? Now, I'm not in the Larry Summers camp, but we should be hiking this year. I think we're just fine where we are.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Decade of printing. Yeah, we have these real yields that are positive. Everything you know has kind of been thrown upside down. However... All these speculative assets. And again, I'm not here to criticize any of”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“It's much easier. Oh my god, no one could. And You obviously get it. It's tough, though, because on the other side, think about what happened starting in November 1 of last year when the Fed kind of authorized that, hey, let's start talking about cuts. And what you saw was really I'm going to call excess into the market, right? Rates rallied meaningfully, spreads came in meaningfully, equity prices went up meaningfully. Gold went up strangely, meaningfully. That's the one I can't get my head around as much. Is gold. Yeah, well, how it went up so much recently.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Correct, and on top of that, you have a boomer generation that ultimately is looking to maybe downsize and things like that, where they'll just say at some point, well, now I can afford the mortgage on the smaller place, right? And I'm up so much on my home. I've doubled my price in the even.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Prices will go down. My contention is if mortgage rates came down 200, prices go down because you have people that are landlocked or they're stuck in this home.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“The supply is gone, right? So think about it this way. One thing we've been thinking about and we've been throwing around the table in some of our discussions is that what if the Fed cuts rates meaningfully and what if mortgage rates come down 200 basis points?”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Least made it sticky? Well, that's the whole thing. If I'd told you rates were going to a seven handle on mortgages, I don't think you would have said that house prices go up from where we were when we were talking about a 2.5% mortgage.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Refinancing took place. It took place, but this is also another reason for that strength of the consumer is that like corporate America who was smart and refied their debt and so did homeowners. So did homeowners. Here's what's caused an inventory problem because now.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Two thirds at 5%. I think it's, well, at least in the agency market, which is easy to look at. If you look at it, you can pull up what's called the effective coupon of the agency mortgage market. So the effective just means that you're taking it all together and averaging it, right? And that number is about three and three quarters today.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“It's crap. It's this thing where they're going to be viewed politically. I tell it people, if the Fed cut 100 basis points two months before the election, do you think it changes the election? It does nothing. Right, it's not in the sidewalk.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Got about one and a half. You got one and a half kind of cuts this year, and it's really that close. No, it's way backloaded. You're talking about probably fourth, like September or something. A lot of people will say, well, the Fed can't cut right in front of the election. They've cut every year.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“And if you keep wages up, if people are making it, even though they may be living paycheck to paycheck, they are spending money. And so this is the thing you can't dismiss in the overall cycle. And so I think when you start to look at it and you take a different perspective versus this year over year and you go back a couple years, you find that you're getting a different signal in the marketplace. And that's something that we had to recognize last year. Well, let's talk about it.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“But I want to go the other way. I want to say you lose your job. If you lose your job, I'm pretty sure that most people don't have an issue going and filing those claims. So when I look at unemployment claims and not seeing spikes or continuing claims not being out there, to me it says something about we can't dismiss the jobs data.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Now, why do I want, but why do I watch that? The one thing I can say is that I'm pretty confident in our fellow Americans. I mean, Barry, you've worked a long time in your career. You paid in the system, right? Sure. If Bloomberg lets you go, let's say Ritholz doesn't want you anymore. That would be kind of weird. But it could happen. What are you probably going to do? You may. You may just get matched. If I decide.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“What I look at in the labor market today is I watch unemployment claims because we can argue about legally unemployment claims about”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right, and I think that has changed the psyche. So, if you want to talk about a regime change, I think that's changed. And I think that's missing in this Fed transmission mechanism right now is that we're not curtailing, we're not increasing the savings and curtailing consumption. We are spending still. And so from that standpoint, as long as people stay employed, that's probably going to continue. And by the way, we're here in April. We're in New York. It's actually a beautiful day outside. Spectacular, right? And this is the seasonal part where you guys on the East Coast start to go out and spend more money too out in LA. We're just drinking all the time. Yeah, we do it all the time. So the seasonal component will probably kick in here too. So this is the idea of waiting for a catastrophe to happen. What's missing in a lot of this is also just the dynamic of the consumer. And look, people have criticized the labor market statistics, birth death models, all of that. But I...”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I haven't yet. I'm making a plea. I'm making a plea still. But where I'm going with this still is that I don't think people have been incentivized to save. And you know what? We have the YOLOs. They have the, there was the idea that we were locked down for a year or two, depending on where your jurisdiction is. People die.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“It is, but so let's continue on this path of why the sentiment so bad is because I don't think that what we see in the slowdown is the savings rate go up, right? If you look at percentage of disposable income, they're really at low levels.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“It was $6 trillion we got to in money market. It obviously went down because of tax payments a couple weeks ago. But the thing is, is that what you find is that that savings wasn't there. Now, I would have contended in 23 that people thought inflation was going to continue at the nine handle, right? Or the eight handle. And so I didn't think that that money market account was enough. Now I think it's that they're not getting paid on their deposits either, right? Yes, sophisticated people do, people we know do this. And our job is to educate more people. All my friends asked me about that don't work in markets, what should I buy? I was like, Janet Yellen's money market account, government money market, don't worry about it. I promise you won't lose money. What's yield?”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“But that's called financial literacy, right? So that's the gap we have here, right? But it's true. And this is not a U.S. phenomenon. This is a global phenomenon, right? That there is just not this robust financial literacy. But so if you think about a person that I was contending probably two years ago going into 22, or I'm sorry, yeah, going into 23 after we had higher rates, that people are going to save money. I didn't realize that the banking system wasn't transmitting that mechanism. We work in capital markets, right? Right. So we know what rates are.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Generally, you're in the mid to high 20s now. And so that, I think, is weighing on sentiment. But it's not changing the dynamic of the spending. And I also think this is part of the whole Fed's policy is that when you're hiking rates, you're trying to do two things to this transmission mechanism. Make credit more expensive. They've done that. Okay. Mission accomplished. But also to curtail consumption, you also want to incentivize savings. That's the missing part in this, I believe. And I saw that, you know, the JP Morgan, CFO, come out of no disrespect there, but he's complained about how clients want CDs. But why he's complaining is because they're paying a basis point on their savings account. And if you have a great relationship, you get two basis points. Well, there's your repression, Barry.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“But here's the problem. Now let's go back on, not instead of year of year, let's go back two years. Let's go back three years. And if you ask people what inflation looks like, usually the common person will give you one of two statistics. They'll talk about their grocery bill or they'll talk about fuel pump prices. That's really how people think about inflation. But if you think about what's happening right now, I think people's anchor is pre-pandemic.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. But I guess where I'm going with this is consumer sentiment, okay? So why does it feel abysmal? Well, let's talk about inflation. So instead of doing what Jay Powell is doing or what all of us do, and they're going to cite the year-over-year inflation number, and by the way, the core PCE is looking a little bit better after this last print. Sure. But Jay has a problem. He's been talking about CPI for the last few years. So moving the goal sticks is just not good for him right now. And he doesn't need to do anything anyway. So we can talk about that later. Listen.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, but you have to see that transaction. Now we have this algorithm, and you can go log in every day and look at your house, and it moves every day kind of or, you know, I think there is something in there. Well,”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the only place that it could potentially happen is with the housing market. And so I think that's part of what you're seeing today, and some of this as well. So we were talking about the M2 growth. And the money supply out there. But don't forget if people feel confident, they're willing to spend money. And I think part of this last push we've seen is that, you know, with the advent of Zillow and Redfin and we can look up the price of our homes and we can creep on our neighbors and our friends, what do they buy? I think that has created something in the psyche of people that they feel a little wealthier if they're a homeowner, especially if the”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“That's what rich people say because they own assets, right? And they're like, if I own more money, you know, like, you know, Barry, I'm Convinced that any of it works”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think what you see here is we realize that the fiscal stimulus drives the consumer at the end of the day. And dumping money into the system has really, really changed that dynamic, where monetary policy, you know, if you go back to Bernanke when they rolled out the QE, he always talked about the wealth effect. He's really telling you trickle down economics, right? That if people feel wealthier, they're willing to spend money.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“What you actually need to do is look at the two year number change or look at the three year number change. And what you need to do is look at the trend line over the last seven or eight years. Not just year over year. And what you would see if you did that trend line, and I put it on a webcast recently, the gap is still so massively to the upside of how much we created relative to this trend. And you can talk, you can do it over many, many, many years, and you get the same result. And so what that means is that there truly is liquidity in the market. We created these dollars and put them out there. And I also, I think you put together the consumer and what's happened there is that behavioral patterns have changed.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“But hold on. I'm not even done with this, Barry. Because I think this is way more important than the old curve. Oh, really? I have some ideas on the old curve, too, that we'll get to. But where I'm going with this monetary growth is that”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“The meme It is. And it's these, you know, what was it, Friedman that said there's nothing more permanent than a temporary government program, right? And that's absolutely true. But when I think about it, You were starting to see is the year over year numbers, we were starting to see the M2 fall precipitously. And it was getting to a point where abstinent of war are going into coming off of these war periods. You've never really seen the Monterey base shrink. We saw it shrink in late 22.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Increase in the amount of money out there, okay? And so you can say that it was free money. You could say we gave free money to people. We gave it to corporations. We printed it. It existed. The Fed bought some of it through, you know, and”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“And this is what we call M2 inside of the wonky economics world. And this M2 growth at one point with all the $6 to $7 trillion of money printed through all these support programs led to an increase in the monetary base of 28% year over year. 2.8. That's an unprecedented”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Don't worry what I'm telling you. Tell you what, you take care of the excess savings. Right. And we're just helping the world out here, right? But phrase I hated. But there's kind of a corollary to it, and it's something that really, I think, is impactful. And it's still in the market today. And this was the amount of monetary growth.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“I also think what happened is that a lot of us are trained, especially from an economic background, to look at in financial markets, to look over year over year. The one I heard so much was excess savings, and I hated the phrase. The Fed used it, and it was like, here's the savings rate, but we pumped all this money in. So thus, there's this excess savings amount that's out there. And I always tell anybody, Barry, if you know anyone with excess savings, I can help them. We can take the excess off your hand. You can put it in bank insurance. You can generate some return. No, you can just put it in the bank of Sherman. Because to me, it's not an excess. All my savings I need, right? It's what I'm going at. There's no excess savings in the world. And so from my standpoint, that's what I would say. So call me if you have excess savings. Forget the investment. I'll just take it off your hands. It'll help all of us out.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“And I think that's reflective of the economy. I think that's reflective of kind of where we are, but also I think that's backward-looking, not forward-looking, right? And so from that standpoint, do I get excited about when the OAS on corporate bonds is like, you know, inside of 90 basis points? Not really. High yield got inside of 300 a couple weeks ago. That's not exciting. And what I hear from a lot of people is, and I'll hear it from the credit team significantly at the firm yield buyer. There's a yield buyer. There's a yield buyer. And there's a threshold of yields. All they care about is yield. Well, if you only care about yield, just go buy treasuries. They have yield. You have to get compensated for each risk. So when I say the excess invaluation, some of it does apply to the corporate market because look, the economy has been very strong, right? I mean, last year was the recession. It was a massive recession. Remember everybody forecast.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“On both. Both. And so, look, corporate spreads are tight today. Valuations are tight. They're tight for a reason. But it doesn't, you know, look, corporate bonds being a little bit overvalued doesn't mean they're going to crash. It doesn't mean you're going to lose half your money. But the problem is in some equity markets, you can have that experience, right? Now, granted, bonds had a significant drawdown, as we all saw in 2022. But from the standpoint of thinking about valuation, credit spreads are not really reflecting much of a default premium today.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“It really is. And unfortunately, war never ends, as we know, right? We continue to see that left and right. But definitely markets are cyclical in nature. And it's the same thing when valuation gets out of control too. It will come home to roost at some point. But it doesn't mean the valuation can't get worse, right? It can't go higher. And so what you have to realize is that you've got to stick to principles. You've got to think through things. And regimes change, but they don't change that much, right? And so what I think in that is that if once you start hearing, this time is different. This is the new era, typically those things are the signs of excess in the market. And look, I think that we've been through one of those recently as well. I think we've had some excesses out there.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Flash crash right around the flash. It was a little bit prior to that But why 10th, I think? Yeah, that was later on. Yeah, I don't know exactly the day, but it was definitely later. But why I remember that is I used to tell people that was the last time we saw a 4% tenure. It was that day that we launched that fund, it was a 4% tenure. And it took us until 2022 to get back to that level.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Paper, no garbage. You don't have to do it. You don't need to proxy for it. You say this is how we want to run the portfolios. And so it was a great time. What I advise people five years ago or six years ago to set up a bondshop? No. But at the time, it was just everything was kind of in our favor. And the thing I remember is the day we launched that total return fund at Double On, it was actually April 6th of 2010.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“It was all written in the perspectus. And by the way, the nice thing about starting a new firm is you can write perspectives the way you want. No legacy.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“It does, yeah, but people don't think that way. They're like, but you're not going to get par back. And by the way, if you don't get par back, these bonds go D for default in a rains agency model.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, so where you just say, hey, I'm buying Wells Fargo shelf paper with six coupons. Now, if you buy an asset with the six coupon at 50 cents on the dollar, and let's just think, you think you're getting par back, that thing has an IRR like close to 30. Right. Right. And that math probably doesn't jump out to a lot of people. But just think of current yield. It's got six. You divide it by 50. That's a 12 current yield. That's the cash flow. Now you have to assume some losses. And what we were doing was just running these bonds to like draconian scenarios where the world's ending. These bonds are still profitable and they don't break they don't lose money, especially at 50 cents on dollar. But the biggest challenge, Barry, that a lot of investors had was say, well, you're buying this, but and we tell them, well, look, we think we're going to get 75 cents on the dollar back. Well, why the hell would you buy this bond?”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source
“No, it was almost 100, actually. Oh, really? At the time, very early on, because it was blatantly obvious that you had two sides of the market. You had the government guaranteed side, which gave you interest rate risk, and you had this stuff that was so bombed out. It had zero exposure to interest rate exposure. It was all about the credit. And as we said, you know, investors fighting the last war were saying, well, if they went down to 50, they must be going to 25.”
2024-05-30 · Masters in Business · Jeffrey Sherman on a Mathematician's Journey Into Finance · IDENTIFIED FROM THE TRANSCRIPT · source