Stocks, Crypto & Exchange
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📰 Know what you own, and know why you own it. 🤝 ~ Peter Lynch | @Exchange
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📈 Analytical overview of Telegram channel Stocks, Crypto & Exchange
Channel Stocks, Crypto & Exchange in the English language segment is an active participant. Currently, the community unites 34 971 subscribers, ranking 6 824 in the Economy & Finance category.
📊 Audience metrics and dynamics
Since its creation on невідомо, the project has demonstrated rapid growth, gathering an audience of 34 971 subscribers.
According to the latest data from 08 September, 2024, the channel demonstrates stable activity. Although there has been a change in the number of participants by 0 over the last 30 days and by 0 over the last 24 hours, overall reach remains high.
- Verification status: Not verified
- Engagement rate (ER): The average audience engagement rate is 0%. Within the first 24 hours after publication, content typically collects N/A% reactions from the total number of subscribers.
- Post reach: On average, each post receives 0 views. Within the first day, a publication typically gains 0 views.
- Reactions and interaction: The audience actively supports content: the average number of reactions per post is 0.
📝 Description and content policy
The author describes the resource as a platform for expressing subjective opinions:
“📰 Know what you own, and know why you own it. 🤝
~ Peter Lynch | @Exchange”
Thanks to the high frequency of updates (latest data received on 09 September, 2024), the channel maintains relevance and a high level of publication reach. Analytics show that the audience actively interacts with content, making it an important point of influence in the Economy & Finance category.
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Posts Archive
🔵 WHAT ARE THE TYPES OF MORTGAGE-BACKED SECURITIES (MBS)❓
▶️ There are two common types of MBSs: pass-throughs and collateralized mortgage obligations (CMO).
▶️ Pass-throughs are structured as trusts in which mortgage payments are collected and passed through to investors. They typically have stated maturities of five, 15, or 30 years. CMOs consist of multiple pools of securities which are known as slices, or tranches. The tranches are given credit ratings which determine the rates that are returned to investors.
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🔵 UNDERSTANDING MORTGAGE-BACKED SECURITY (MBS)
▶️ Mortgage-backed securities (MBS) are variations of asset-backed securities that are formed by pooling together mortgages exclusively. The investor who buys a mortgage-backed security is essentially lending money to home buyers. An MBS can be bought and sold through a broker. The minimum investment varies between issuers.
▶️ As became glaringly obvious in the subprime mortgage meltdown of 2007-2008, a mortgage-backed security is only as sound as the mortgages that back it up. An MBS may also be called a mortgage-related security or a mortgage pass-through.
▶️ Essentially, the mortgage-backed security turns the bank into an intermediary between the homebuyer and the investment industry. A bank can grant mortgages to its customers and then sell them at a discount for inclusion in an MBS. The bank records the sale as a plus on its balance sheet and loses nothing if the homebuyer defaults sometime down the road.
▶️ This process works for all concerned as everyone does what they're supposed to do. That is, the bank keeps to reasonable standards for granting mortgages; the homeowner keeps paying on time, and the credit rating agencies that review MBS perform due diligence.
▶️ In order to be sold on the markets today, an MBS must be issued by a government-sponsored enterprise (GSE) or a private financial company. The mortgages must have originated from a regulated and authorized financial institution. And the MBS must have received one of the top two ratings issued by an accredited credit rating agency.
▶️ There are two common types of MBSs: pass-throughs and collateralized mortgage obligations (CMO).
1⃣ Pass-throughs: Pass-throughs are structured as trusts in which mortgage payments are collected and passed through to investors. They typically have stated maturities of five, 15, or 30 years. The life of a pass-through may be less than the stated maturity depending on the principal payments on the mortgages that make up the pass-through.
2⃣ Collateralized mortgage obligations (CMO): CMOs consist of multiple pools of securities which are known as slices, or tranches. The tranches are given credit ratings which determine the rates that are returned to investors.
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🔵 WHAT IS A MORTGAGE-BACKED SECURITY (MBS)❓
▶️ A mortgage-backed security (MBS) is similar to a bond. With MBS, banks bundle mortgages and sell them as a package to Wall Street investors.
▶️ Mortgage-backed securities gained prominence in the early 2000s when loan originators began offering mortgages to borrowers who normally would not qualify for a loan, then packaging those riskier loans and selling them on Wall Street in the form of mortgage-backed securities.
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🔵 HAVE THERE BEEN MORE RECENT EXAMPLES OF A LEHMAN MOMENT❓
▶️ In late 2022, speculation began circulating about the health of Switzerland-based global investment bank Credit Suisse, which experienced a series of scandals and losses that hammered its share price and raised investor fears of possible insolvency.
▶️ Some likened the possibility of Credit Suisse failing to a Lehman Moment due to the size of the bank and its worldwide reach.
These are some of the problems that have placed Credit Suisse in peril:
▶️ In early 2021, U.K.-based financial services company Greensill Capital went under, leaving Credit Suisse shareholders with a $3 billion loss, as the bank had invested in Greensill. Just a month later, Credit Suisse lost a further $4.7 billion as a result of its involvement with Archegos Capital, and at least seven Credit Suisse executives lost their jobs.
▶️ In February 2022, Swiss officials charged Credit Suisse with laundering money for a Bulgarian cocaine trafficking ring, later found the bank guilty, fined it 1.7 million euros, and ordered it to pay 15 million euros to the Swiss government.
▶️ More recently, the bank was accused of ordering hedge funds and other investors to destroy documents that linked the funds to sanctioned Russian oligarchs, leading to investigations into the bank’s compliance with Swiss sanctions imposed in the wake of Russia’s invasion of Ukraine.
▶️ Credit Suisse’s stock fell from a pandemic-era high of $12.30 to below $5 by late October 2022, erasing more than 50% of the bank’s market capitalization.
▶️ Credit Suisse’s credit default swap (CDS) rate also climbed from just 1% to nearly 6%. A CDS is essentially an insurance policy against default on the loan, so higher rates indicate the market thinks there is a greater possibility that the bank may not be able to pay its debts.
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🔵 LEHMAN’S DEMISE
▶️ Even as Lehman continued to report record profits, cracks began to appear in the U.S. housing market in which it was heavily invested. Subprime mortgage defaults hit a seven-year high, while the Bear Stearns bailout spooked the market. Lehman exacerbated concerns in June 2008 when it reported a second-quarter loss of $2.8 billion.
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🔵 LEHMAN’S ROLE IN THE SUBPRIME MARKET
▶️ Like many large financial institutions, Lehman had piled into the subprime market. In 2003 and 2004, Lehman acquired five mortgage lenders, including two that specialized in subprime lending: BNC Mortgage and Aurora Loan Services.
▶️ Lehman’s real estate business helped drive revenue in its capital markets unit, which climbed some 56% from 2004 to 2006. Lehman reported record profits in 2005, 2006, and 2007, when it reported $4.2 billion in net income on $19.3 billion in revenue.
▶️ In February 2007, Lehman’s stock price hit $86.18 per share, a record that gave it a market capitalization of nearly $60 billion.
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🔵 WHAT IS A ‘LEHMAN MOMENT’❓
▶️ The term “Lehman Moment” refers to a situation in which the problems of one company or one seemingly minor component of the economy turn out to be so large that they become everyone’s problem. The term is a reference to the 2008 bankruptcy of Lehman Brothers, then the eighth-largest investment bank in the United States.
▶️ The bankruptcy triggered a huge stock market downturn and put such pressure on the rest of the financial industry that the federal government stepped in with a $700 billion program of bailouts and arranged mergers to stabilize the financial system.
▶️ And the problem was not limited to the U.S. It spread globally and became the 2008 global financial crisis.
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🔵 KEY DIFFERENCES BETWEEN CAPITALISM & FREE MARKET
▶️ Some key features of capitalism include the competition between companies and owners, private ownership, and motivation to generate a profit. In a capitalistic society, the production and pricing of goods and services are largely determined by supply and demand—the free market—but some government regulation and oversight may occur. And the profits of capitalist endeavors can be taxed heavily.
▶️ Also, the market may be free in name only: A private owner in a capitalist system can have a monopoly in a particular field or geographic area, preventing true competition.
▶️ In contrast, a free market system is ruled entirely by demand and supply, and there is little or no government regulation. In a free market system, a buyer and a seller transact freely and only when they voluntarily agree on the price of a good or service.
▶️ For example, suppose a seller wants to sell a toy for $5, and a buyer wants to buy that toy for $3. A transaction will occur when the buyer and the seller agree on a price. Because a free market system is based solely on supply and demand, it leads to free competition in the economy, without any intervention from outside forces.
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🔵 IS FREE MARKET THE SAME AS CAPITALISM❓
▶️ A capitalist economy and a free market economy are two types of economic systems. Often the terms are used interchangeably, especially in casual parlance. But, while they have overlapping qualities, the two are not quite the same thing.
▶️ Capitalist and free-market systems do spring from the same economic soil, so to speak: the law of supply and demand, which becomes the basis to determine the price and production of goods and services.
▶️ But they refer to different things. Capitalism is focused on the creation of wealth and ownership of capital and factors of production, whereas a free market system is focused on the exchange of wealth or goods and services.
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