Reply #22: haha, you are so right!

[Lucky Luciano]

I am a math PhD and I just got laid off from my trading job due to the dipshits that lost money. Incidentally, I did not lose money. Go figure....but I am thoroughly domestically retarded. Never had a lick of interest in the mundane tasks such as cooking, cleaning, etc. Too boring and no adrenaline. Now I am playing poker to support myself while I wait to get back in the saddle again.

The OP is overly simplistic. The only way he gets to claim he is smarter than the rest of Wall St if he puts his money where his mouth is and shorts the market at the top. He did not short the market at the top...and if he tried to short the market in 2004 or 2005, he would have had his face ripped off and he would have looked not-so-smart.

...and CDS's are not overly complicated. They are very easy to explain. The CDOs are much harder because you do not have a good feel for what is inside of them. People priced them using statsistical models. Let's say that the CDO involved securitizations of mortgages. The idea being that a large package of mortgages should have a default rate that is equal to roughly the mean of defaults in the past for similar kinds of mortgages. The trouble was that the statistical study probably assumed that underwriting standards were constant...clearly not. In any kind of bubble, standards are lowered...so loan qualities were much lower and people who did not deserve to own a home at all bought very big fancy homes.