Chapter 7

This chapter was very interesting, and a lot of complicated material. I thoroughly enjoyed learning more about the 2008 Financial Crisis because it is something that we all lived through quite recently, but we weren't equipped with the knowledge to fully understand it. The AIG meltdown, which I hear referenced pretty often in regards to the tumultuous time, actually had to do with guaranteeing debt that could not be really accounted for. They speculated and left a lot of  room for risk by underselling their product.This speculation also plays into the stock exchange and Wall Street. One comparison that Wheelan pointed out that really stuck out to me was the Chicago Brownstone and stocks. If you find a  Brownstone on the market that is underpriced, it should make you suspicious. Even if it meets all of your expectations, has a great neighborhood, and passes all of the inspections, it should still alarm you that someone is selling it for way under what it is worth. This is really what should be running through your head when stock brokers are trying to sell you stocks.  They need to sell it, and it looks like a good entrance for you so you buy it, yet they were trying to get rid of it. While Wheelan points out that it could be for a multitude of reasons, but that our lack of patience for a good return drives this. The market also sets a fair price based on what the seller thinks it's worth, which relates to why Brownstones sell for $500,000 instead of $250,000.  I also thought that what was really interesting about this is that unlike health care, like we discussed in Chapter 5, everyone buying stocks has the same information available to them. Yet there is still huge drawbacks and risks to knowing all of the information. You don't get to know what is going to happen to this investment in the future, while with healthcare, you know that you did all that you could to prevent something worse from happening by going to the doctor. With an investment you could lose all of your money or reputation based on trends that are not predictable.