Financial Engineering Quotes

Look, don't congratulate us when we buy a company, congratulate us when we sell it. Because any fool can overpay and buy a company, as long as money will last to buy it.

In engineering, people have a big margin of safety. But in the financial world, people don't give a damn about safety. They let it balloon and balloon and balloon. It's aided by false accounting.

The people who did the collateralized mortgage obligations, sold them to pension funds, then sold them short, then bought credit default swap insurance on them, are just amazing. They are a law unto themselves.

The activists play the balance sheet by selling a division to buy back stock and leveraging the balance sheet and buying back more stock.

Private equity firms aren't necessarily evil by definition. There are many stories of successful turnarounds fueled by private equity, often involving multiple floundering businesses that are rolled into a single entity, eliminating duplicative overhead.

Trust-me companies are companies whose financial results gallop ahead of their businesses, companies with seemingly perfect control over their quarterly sales and profits. Companies whose financial statements are loaded with footnotes: companies that short-sellers often attack but rarely dent.

Financial hydrogen bombs built on personal computers by 26-year-olds with MBAs.

Diversifying sufficiently among uncorrelated risks can reduce portfolio risk toward zero. But financial engineers should know that's not true of a portfolio of correlated risks.

I have either run private equity funded companies or been a partner in a private equity fund since 1982. I've had a front row view of the vital role private equity continues to play in building and keeping American businesses competitive in the global economy.

Very few of the heroes of the Golden Age of American finance had much interest in the solid realities of what underlay their structure of stocks and bonds and credits .

When I was in the leverage buy-out business we bought Weetabix and we leveraged it up to make our return. You could say that anyone who was eating Weetabix was paying for our purchase of Weetabix. It was just business. It is the same for Liverpool.

I see myself as a private-equity investor that helps rebuild companies. Restructuring is a cottage industry in that there aren't that many serious practitioners.

There is a simple rule here, a rule of legislation, a rule of business, a rule of life: beyond a certain point, complexity is fraud. You can apply that rule to left-wing social programs, but you can also apply that rule to credit derivatives, hedge funds, all the rest of it.

I think one problem we've had is that people who are smart and creative and innovative as engineers went into financial engineering.

I mean, they were getting the mortgage of some guy in Omaha, you know, securitized a couple of times. I mean he had all these - they had all these types from Wall Street, you know, and they had advanced degrees, and they look very alert, and they came with these - they came with these things that said gamma and alpha and sigma and all that. And all I can say is beware of geeks, you know, bearing formulas. They've heard that in Europe.

Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.

Less than a year after loading the company up with debt, Romney and Bain gave themselves bonuses four times bigger than the $8 million they had put into the deal.

There used to be corporations that produced products. Now there are just banks that produce deals, hedge-fund-driven banks and derivatives and those things.

Financial innovation is an oxymoron. It's very rare that there is something that's actually financial innovation. It's a euphemism for hiding leverage.

In the '70s and '80s, what private equity did is it changed corporate America. It started holding companies accountable, and for the first time managers started thinking like owners.

Yet another hedge fund manager explained Icelandic banking to me this way: you have a dog, and I have a cat. We agree that each is worth a billion dollars. You sell me the dog for a billion, and I sell you the cat for a billion. Now we are no longer pet owners but Icelandic banks, with a billion dollars in new assets.

Your normal Wall Street big-swinging Richard has enough of a lingering moral compass to at least tell himself that his wizardry benefits somebody or something besides himself. You know, his cleverness makes capital markets more efficient. It provides credit to productive enterprise. Whatever.

In the financial sector, those whom the gods want to destroy they first teach math.

I am much less concerned with whatever it is technology may be doing to people that what people are choosing to do to one another through technology. Facebook's reduction of people to predictively modeled profiles and investment banking's convolution of the marketplace into an algorithmic battleground were not the choices of machines.

Mea culpa, mea culpa. MIT and Wharton and University of Chicago created the financial engineering instruments, which, like Samson and Delilah, blinded every CEO. They didn't realize the kind of leverage they were doing and they didn't understand when they were really creating a real profit or a fictitious one.