This lecture is a time capsule. So interesting to have this level of conversation before Lehman Bros collapsed and to hear about the dead cat bounce when the fed backed Fannie Mae / Freddie Mac. When he describes the forest fire with hidden gas tanks exploding, he exactly predicted how it would unfold in the following year.
@j-duff4936
2 жыл бұрын
Crazy, he’s a G0aT
@Emily-fm7pt
Жыл бұрын
Exactly my thoughts! In these lectures he seems to be predicting to a T how the whole crisis went down. Just shows how predictable the whole thing was I guess.
@MidnightV6
8 ай бұрын
it was already unfolding when this was recorded..
@Gumden
6 ай бұрын
@mclaren720 no it wasn't, they were still talking about saving lehman bros
@directorans
8 жыл бұрын
"If Lehman Brothers go under..." hah
@arrowb3408
4 жыл бұрын
Yes, need to catch up with what AL said the prerequisite preparation in the lecture. That's it
@akashbavishi6615
3 жыл бұрын
@@arrowb3408 you failed to understand comment i guess
@syedhussain8796
5 жыл бұрын
To the people who say the beginning question and answer session is a waste of time are not really interested in Finance. We are lucky that these lectures take place as the 2008 financial crisis is unfolding. I myself am interested in finance theory because of those times and how the bankers along with SEC, AIG and credit rating agencies fucked over the American people and the global economy.
@gregorybattis9588
4 жыл бұрын
Absolutely nothing in this video makes me think waste of time. This course actually got me interested in finance to begin with. Since it took place during the recession my interest was sparked because of this. Everyone there in person should be so incredibly grateful that they had Andrew Lo as a professor. I recently purchased his book Adaptive Markets: Financial Evolution at the Speed of Thought and cant wait to read it once it gets here.
@gregorybattis9588
2 жыл бұрын
Back again to rewatch the series a year after my 3rd pass. Watched these for 4 years now every year and I will keep coming back to this series. Best professor!
@timwhite7127
7 ай бұрын
Prof. Lo knows his stuff but as an MIT instructor that is implied. I'm just a retired old wrench twister who is trying to nibble at the education I wish I had acquired many years ago and I'm grateful for the prominent universities for making some of that possible through this platform. Prof. Lo does a remarkable job of explaining the evaluation of markets and how decisions are primarily based on those valuations which is more or less a fancy way of saying follow the money. My one hope as one who has observed what the capital markets have given us over the ages, both good and not so good, is that he can contribute to sending out the leaders and decision makers of tomorrow who will be making those financial decisions, with an instinct to take in more than simply the p/l statement and consider the other consequences of those decisions. People overlooked Arrhenius over a century ago and it's our grandchildren who will inherit those consequences. Thanks again.
@nabidhassan9407
5 жыл бұрын
Q&A till 21:10
@afihaileywibowo1095
3 жыл бұрын
Thank !you
@mishelmonroy4452
2 жыл бұрын
Tysm
@lazzyrabbit5817
5 ай бұрын
Views are dropping with each lecture. If you made it this far, keep going bro.
@kushalsaitia971
4 жыл бұрын
If you're not interested in the Q&A session, you can skip to 21:20 to jump straight to lecture 3.
@angelbaby.7897
2 жыл бұрын
Life saver
@ron3252
Жыл бұрын
Time saver! Thanks
@rewolfer
Жыл бұрын
hero
@unholygundan
Жыл бұрын
ughhhh twas grinding my gears
@managementbyheart
10 жыл бұрын
Mr.Lo's class is very informative. This is a classical MBA finance class.
@zhaoweilong7332
Ай бұрын
This lecture is really hidden treasure and one of the best MIT product from Professor. Lo. I am amazing how we are lucky. People who are intersted in finance like us ,can learn this kind of high quality lecture through youtube.Whatever this lecture was 11 years ago, it still gives knowledgeable finance theories and how to imply in real world.Thanks to MIT and Prof.Lo.
@arielroshan1142
4 жыл бұрын
10:30 Lo predicted 2008's crash
@selinaaberly2540
10 жыл бұрын
Thank you very much for these lectures, MIT and Professor Lo.
@vittoriovergari9018
10 ай бұрын
one of the best channels on you tube, thank u from the bottom of my heart❤
@byoungjunjo1069
4 жыл бұрын
13:00 Helicopter and firewall analogy for the 2008 financial crisis 19:15 Look at muti-perspectives: social, economical, political, etc.
@9MusicisLife5
2 жыл бұрын
*Any question ever asked* Dr. Lo: “Well, actually we will cover that in lecture 6137”, or “I’m hoping YOU will be able to answer that question yourself by the end of the semester”. 😂 Excellent content, and I’m enjoying the experience, just something I thought was funny.
@pedalesmexicali
7 ай бұрын
I thought the same thing as I am just finishing the 3rd class…like WTF man.
@tensevo
6 жыл бұрын
Good instructor. Agree, we should use economic tools to solve economic problems and political tools to solve political problems. It seems we sometimes get mixed up and try to use economic tools to solve political problems and vice-versa. Agreed, it is not as simple as letting big institutions and countries fail, because someone else, who may be politically motivated, will step in to bail out if you do not.
@TopGunMan
5 жыл бұрын
As a general principle, the public likes simple solutions for almost every issue, when actually every issue is unimaginably complex, even intractable.
@fhowland
6 жыл бұрын
Excellent class and superb teacher! Wish I could get into Sloan! Thanks MIT for putting it on KZitem!
@arrowb3408
4 жыл бұрын
Yes, firewall in forest is to keep the wild fire away from extensively engulfing the entire mountain range; on the other hands, applying this theory in financing world is kind vague without an intact "fire wall" to let those "forest" inside the ring to burn off and to keep the rest safe. That's a really interesting Zen to applying in the finance world that I never thought about using firewall theory at all. Excellent idea. But who needs to be blame? Another problem comes up.....STF......
@Varttino
4 жыл бұрын
AUDIENCE: [INAUDIBLE]. Andrew Lo: That's a great question! WTF MIT
@jamespatrick5348
2 жыл бұрын
Warren Buffet sold Delta Airlines pretty close to its bottom shows me that calculating NPV is very difficult to get right, and it probably consists of guesses about guesses or something like that.
@gabriel.casanas
3 жыл бұрын
the "Consol bond" ended in 2015. So much for forever
@zeweichu550
3 жыл бұрын
This course is awesome.
@FGPR01BrunoCauz
Күн бұрын
To students who are confused why PV for perpetually growing cash flow formula doesn't work when r < g When r < g, the terms get bigger and bigger as we move ahead in the series, therfore the infinite series is divergent meaning it does not add to a finite value... While in r > g case, as we move ahead in series the terms get smaller and smaller so it adds to a finite value, hence it's a convergent series.
@restlessmillionaire
25 күн бұрын
- NPV change on currency (do in currency u care) assumption: it changes - risk is hidden (firewalls analogy) - political issues answered with political things, and economy things with economic - with higher interests/discoount, €1 is more valuable -> increasing interest rate, diminishes the NPV (that's why market matters in the mkt interest rate -- it's actionable, not theoretical; market is real) - PV=C/r --> it has 10 discount rate, because it gives 10 on return, so its priced because the return is the discount (it goes in a circle idea(
@krishnakishore1083
3 жыл бұрын
no words...best professor i have ever seen..thanks a lot Andrew Lo sir krishna kishore
@paulsamuelson98
11 жыл бұрын
Andrew Lo is a boss
@antoinelavoisier9784
2 ай бұрын
Why does the professor waste time on advanced issues in the news when the lecture series has only recently broached the most rudimentary finance principles? "Now that we've discussed the collapse of the sub-prime mortgage market, let's look at how to create a basic amortization schedule."
@sixinghu9291
6 жыл бұрын
top university, top professor, top learning experiences, just straight to success. I want to mit
@usf5914
3 жыл бұрын
what is going on? are u there?
@xxyyzz8464
Жыл бұрын
11:42, I wonder what they edited out and didn’t want us to see or hear? Also weird he always says the interest rate comes from the market. The FOMC controls the short-term rates and can even control longer term rates based on what inflation rate they target and whether they are in QE or QT mode and how aggressive they are.
@lizapovalyaeva
4 жыл бұрын
Brilliant explanation! Thank you, Andrew Lo and MIT
@boringmanager9559
6 жыл бұрын
By the number of likes, I can judge attendance rate goes down like crazy: 2k, 800, 380
@jonnavittula
11 жыл бұрын
After financial crisis 2008..people, institutions, banks, politicians learned a lot about CDS, CDO, MBS etc..unfortunately these students were the product of THE MIT at the time of financial crisis... Andrew Lo is really an influential professor whose got tons of patience.,and trying his best not to answer abt upcoming danger which i think he already knew ..by the way thanx to MIT, and Mr. LO
@j-duff4936
2 жыл бұрын
Man.. after the 2022 crisis honestly this guys teachings still hold true. True power to the people. GOAT
@ZirikanaTRUESuccess-bc3te.
Ай бұрын
I am also very much interested in MIT COURSE FROM KZitem
@joelmartinez625
4 жыл бұрын
I think it's very interesting to hear the Q&A I think it adds a lot
@erenyeager4452
3 жыл бұрын
Fun fact: Mr.Lo starred in the Big Short.
@farledj3461
Жыл бұрын
At 26:40 I don't fully understand how the values in year 1, 2 and 3 are 86.538, 83.210 and 80.010. I get 86.400, 82.944 and 79.626. Can someone please enlighten me?
@MegaChemicus
8 ай бұрын
90000/(1.04) instead of 90000*0.96
@brandaccounts1817
5 жыл бұрын
Excellent Professor Lo. I hope to see your name on the Nobel Economy Laureate for next year.
@danielortega2441
3 жыл бұрын
I hope the same
@astrogumbo
3 ай бұрын
i wanna meet the student that asked that particular question:)
@romyarcher2934
2 жыл бұрын
من تلاشی را که برای ویدیوهایتان انجام می دهید تحسین می کنم. ارزهای دیجیتال همچنان در حال تغییر جهان در سراسر جهان هستند. این روزها کمتر کسی می تواند در برابر آن مقاومت کند. با این حال، از دیدگاه یک معامله گر، من فکر می کنم ما واقعاً به متخصصان بیشتری در این زمینه نیاز داریم تا به تازه واردان در مورد نحوه عملکرد جامعه آموزش دهند. ارزهای دیجیتال به تدریج به سمت چیزی بزرگ حرکت می کنند و افزایش قیمت در چند ماه گذشته تنها شروع چیزهای بزرگتری است. بسیاری از مردم در مورد زمان خرید در بازار و اینکه آیا برای خرید یک دارایی خیلی دیر شده است، تردید دارند. اگر نگه دارید، ممکن است، اما در تجارت هرگز برای خرید دیر نیست. یک معامله گر با استراتژی و شاخص های مناسب، صرف نظر از قیمت بازار (گاو نر یا خرس) سود زیادی می کند. من سیگنال های کارشناس معاملاتی آقای جان ادکینز Trading Signals را معامله می کنم. با استفاده از خدمات راهنمای و سیگنالهای او، در طی چند ماه بیش از 10 بیت کوین دارایی رمزنگاری با تخمین 2.5 بیت کوین برای شروع ساختم. شما به راحتی می توانید در ??I??ramm;arncough (@Johnccrypto) برای مسائل کریپتو با او تماس بگیرید،،...
@vishaltripathi6864
5 жыл бұрын
Dislikers are most likely biggest foolish to this earth
@Usman-ml4ig
5 ай бұрын
Just use the Financial Calculator plz…
@salemkid_96
4 ай бұрын
Can someone please help me understand what he meant when he said at 33:50. "If I have a piece of paper that pays 100 dollars a year forever, with a 10% interest rate, how much is that piece of paper"? How does the answer equate to 1000 ? With an interest rate of 5% how is the worth of the piece of paper doubled to 2000?
@MoolA1
4 ай бұрын
c/r = 100 / .1 = 1000. if interest rate goes down to .05, then the pv of perpetual fixed income securities is doubled to 2000. you correct
@MoolA1
4 ай бұрын
in addition to the numerical proof inside the lecture, the pv of principal goes to 0 when time goes to infinity. so you dont care about principle but only interest rate implied and coupon.
@astrogumbo
3 ай бұрын
the first 6 minutes is A LOT OF MONEY.
@NomiLOL
11 жыл бұрын
wow theres a talk about leman brothers :D
@ahmedruwayhil2228
7 жыл бұрын
Conspicuously clear session
@richdevil5816
4 ай бұрын
💯
@astrogumbo
3 ай бұрын
"You might wanna look dat up" hahaha
@dennisb.3485
10 ай бұрын
That is a stupid question: the type of currency would not have an affect on the NPV. All future cash flows are based of of the initial investment. Unless you changed currency type in the middle of the analysis which would also be a mistake. Even as the professor explained that if there was a deprecation/appreciation of the currency - it may influence the NPV. This is also not true because NPV is relative to the discount rate at the time of analysis and currency rate is taken into consideration upon selecting the appropriate discount rate.
@crjacinro
3 жыл бұрын
Cant believe I am watching MIT Sloan class while riding a bus.
@roc7880
3 ай бұрын
the most valuable attribute of a wise and knowleageble teacher is simplicity without reductionism. prof Lo is a zen master of finance, he needs to get his own university.
@shailen159
11 жыл бұрын
thank you Mr. Lo. Such crisp and clear explanations. I am to start my MBA in July this year, n so good to have the understanding of basics of finance beforehand.
@thatoneguy6725
4 жыл бұрын
did ya get that MBA?
@twinprime
3 жыл бұрын
@@thatoneguy6725 I'm doing my MBA in the best business school in my country. But I'm supplementing my knowledge and understanding with this series of lecture.
@princemishra09
7 ай бұрын
same@@twinprime
@Chris-ez2sc
21 күн бұрын
1:30
@HarshShukla-o5v
Ай бұрын
THANKS FOR AWARENESS
@DreamWalker886
2 жыл бұрын
Tsla has G bigger than R, therefore its stock price has been increasing exponentially, LOL
@TN-ii8js
11 ай бұрын
What is practical application for understanding these concepts for normal individual
@clintpot8521
3 жыл бұрын
How do you figure the value of a crypto? Where the USA people can buy them for say $20, but Nigeria is going into hyperinflation, so nobody can afford a $20 item?
@cjohnson9211
2 жыл бұрын
Very good instructor!
@milindbebarta2226
Ай бұрын
No other course on Finance anywhere on the internet comes close to this. 10/10
@krystynazawadzka1120
Жыл бұрын
As for cnooc calculation,why the interest is being deducted from borrowing base, its not mentioned that this is a discount.
@chrishandle2
3 жыл бұрын
Watching this lecture after recently reading Stress Test is very insightful. Mr Lo comes across as very prescient.
@MrMits92
Жыл бұрын
is there anyone who has access to "Principles of Corporate Finance" 9th edition ? Please let me know where can i get this edition 🙏
@shensucre2013
9 жыл бұрын
so many qustions.
@JRis44
2 жыл бұрын
Cant believe how much free education there is today. Thanks MIT. Always wished i could go but I wasnt smart enough when I was younger. Look forward to taking more advantage of opportunities like this thoough!!! Great Teacher btw. Keep up the great work Mr. Lo
@JRis44
2 жыл бұрын
@@luisvazquez183 Its a Bitcoin enthusiast thing. Laser focused on seeing Bitcoin make it to $100k per coin. Technically it would only take roughly 1% of the worlds total assets to be allocated to crypto to see that kind of price. XD
@Pdh428
6 жыл бұрын
questions stop at 21.15
@ahmedruwayhil2228
7 жыл бұрын
Well session
@rickynave
3 жыл бұрын
I wonder how this guy would analyze forex markets. No cash flows, yet there is quantitative information about relative values of the currency "assets" based on supply, demand, and central bank policies
@thatoneguy6725
4 жыл бұрын
guy in the blue is bored (tired?) as shit and although Im enjoying the subject I cant say I blame him. Mr. Lo is great though!
@JorgeRamos-xw6dy
2 жыл бұрын
The people that lost the most money are not the ones who benefitted from taking the risks but the unsofisticated homeowner that were prayed on by the same financial institutions that were bailed out.
@MrJason9142002
3 жыл бұрын
This guy bid on kissing my balloon knot and won. Kiss the wabbits between da ears!
@aseemgoyal101
Жыл бұрын
Is it an undergraduate course lectures or MBA? If it is MBA then these are very basic...I guess.
@mitocw
Жыл бұрын
This is a beginning graduate class. See the course on MIT OpenCourseWare for more info and materials at: ocw.mit.edu/15-401F08. Best wishes on your studies!
@nguoikechuyenlichsu6472
11 жыл бұрын
Thank you Mr. Lo, I have known the perpetuity and other before, but I never got a clear explanation as what you do.
@alejandrobernal1779
5 жыл бұрын
Can somebody help me? If u get the interest rate (r) from the market, then is the interest rate always te same for all the agents who want to value an asset?
@asherreich9820
4 жыл бұрын
Remember that we're using convenient abstractions, fictions which only model the real world to a certain degree. But yes, assuming that interest rates are always fixed, and that there is at least one market in existence (meaning that at all times there exists at least one agent willing to borrow money at that market's interest rate), then the price of any asset can be no higher than the future cash flows as discounted by the lowest interest rate that exists. This follows from our axioms - again, useful approximations - that presume (1) perfectly frictionless (free and instant) exchanges, (2) the rationality of economic actors, who would never pay more than the lowest price available.
@cjohnson9211
2 жыл бұрын
@@asherreich9820 The Law of One Price...right?
@sudmry26
Жыл бұрын
note to self, perpetuity is a convergent power series, hence finite.
@michaelwithrock9005
5 жыл бұрын
"every now and again, you get your face ripped off." LAWL
@treystyles7307
3 жыл бұрын
where can i get the maths problems from this course
@mitocw
3 жыл бұрын
Any of the materials that we have for the course are available on MIT OpenCourseWare at: ocw.mit.edu/15-401F08. Best wishes on your studies!
@tostedbutt
3 жыл бұрын
@@mitocw thank you
@emirukeshov5255
11 ай бұрын
37:48 can somebody tell me what is the answer , (the question is how to calculate the price if we have the ''r''), it is 5% am i right?
@scenic_lover
Ай бұрын
It must be 20% right? (1/5)*100
@raccess21
Жыл бұрын
To students who are confused why PV for perpetually growing cash flow formula doesn't work when r < g When r < g, the terms get bigger and bigger as we move ahead in the series, therfore the infinite series is divergent meaning it does not add to a finite value... While in r > g case, as we move ahead in series the terms get smaller and smaller so it adds to a finite value, hence it's a convergent series.
I love how at this point interest rates across the entire curve are headed straight to 0. 😂😂😂
@himjanand2034
4 жыл бұрын
anybody want to work with me through this class?
@shivamgarg596
4 жыл бұрын
yes we can work on it
@shivaprasad098765432
4 жыл бұрын
Sure!
@aliasad628
11 ай бұрын
How can I access the problems and questions that mr. Loo mentioned
@mitocw
11 ай бұрын
The course materials are available on MIT OpenCourseWare at: ocw.mit.edu/15-401F08. Best wishes on your studies!
@r.a.28
3 жыл бұрын
The third person sounds like an Indian.
@zackzhu9865
4 жыл бұрын
slide 22, (31:06), wait, isn't this day to day job?
@TakeElite
Жыл бұрын
1:07:10 Explication de chaque constante
@richdevil5816
5 ай бұрын
Good Lecture!!
@GetJesse
2 жыл бұрын
🧐
@C8yti
Жыл бұрын
1:10:02
@C8yti
Жыл бұрын
1:04:15
@youlookawesome722
3 жыл бұрын
What about an interest free economy?
@deeeeeeps
2 жыл бұрын
36:27 he predicted the future.
@sujaykha
7 жыл бұрын
the guy who asked the 1st question went on to become ceo of j p morgans😅
@Alextipping5
7 жыл бұрын
No he didn't lmao
@luckylove72
4 жыл бұрын
33:09 yes sir we did it and sum of all integers is 1/12 using that trick
@himjanand2034
4 жыл бұрын
do u want to work with me through this course?
@himjanand2034
4 жыл бұрын
@@sparshgupta4077 yes I am
@rahulsolai
4 жыл бұрын
@@himjanand2034 I'd like to
@AndresCoca-u6i
7 ай бұрын
Actual class starts at 21:15
@joemeyer6876
2 жыл бұрын
This is so ironic in 2022. . . .
@rwnorris24
7 жыл бұрын
God all I ask is for is a wrinkle in the fabric of time and space so I could have been in this class durning GFC.
@lincha3216
8 жыл бұрын
Interest rate comes from the market. How do you pick it?
@jad4122
8 жыл бұрын
+Lin Cha market pricing determines the interest rates, auctioned by the market participants (by professionals who know what they're doing).
@lincha3216
8 жыл бұрын
+FCK YOU So the price can't represent the real value? It just reflects how much the participants think it is?If it's true, there comes another question: how can you see the real value? In another word, can you define real value and find a way to figure it out?
@jad4122
8 жыл бұрын
+Lin Cha Interesting questions, I'd recommend that you look for this course professor email and hope for an answer.
@jaywinters5506
8 жыл бұрын
Watch the first lecture. This is it's "real" value. It's monetary value is how much participants are willing to pay for it. If you are talking about intrinsic value you are in the realm of ontology and its somewhat subjective. You also need to think about what you mean by "real". Can some things be more "real" than others. Our society reflects an object's value via the scale of money through the consensus of the market. That scale can be inflated of deflated i.e 1USD measures less than it did 50 years ago but this is due to the amount of goods vs money in circulation. Basically money actually is our attempt to quantify "real"value.
@jaywinters5506
8 жыл бұрын
Also interest rate comes from the fact that in lending money (value) or investing the value the participant lending/investing it could be earning money by using this value elsewhere and takes a risk by parting with it and so needs incentive. Also as a borrower/investee, getting value now to payback later itself has value and is reflected in the interest rate, i.e the time value of money. This is still its "real" value, it's simply taking the complexities of the market into account.
@jeffreyanderson5333
3 жыл бұрын
Ok, now we need to learn calculus in a MBA program
@ashlindcruz4101
2 жыл бұрын
🙌
@quinnlevy8996
Жыл бұрын
Did he assign any readings this time around? If so I must've missed it
@mitocw
Жыл бұрын
For a more detailed list of topics covered in this course, refer to the Course Outline by Topic available in the syllabus at: ocw.mit.edu/15-401F08. Best wishes on your studies!
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