Mortgage-Backed Securities
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3 Min
We all think of investing as this big, scary thing, the monster under your bed, if you will. All someone has to do is say the words “finance” or “investment” and people are either put under a spell or frantically looking for the emergency exit signs.
Once I’ve mentioned finance, interest rates, and home buying, I now have to do the intricate dance of my mortgage forefathers to calm people down. I have to use my silky hostage negotiation voice, smile, and maintain friendly eye contact to prove that I come in peace, and that I only want to help.
Truth is, people get nervous because money talk can bring up a lot of insecurities. The people running for the exits might not have perfect credit or a past bankruptcy, and they’re thinking that I’m going to judge them. The people who are put under a spell immediately, I’m especially careful with. These are the clients that put all of their trust in me from day one, and I take that responsibility very seriously.
But the one thing that both of these types of clients have in common is that they both believe that investing is too complicated.
“I could never do that,” people think to themselves.
Yes. You. Can!
And to prove it, I want to talk about two examples I’ve recently come across that show how incredible, creative, and downright silly finance can be. The thing I’d love for people to understand is that finance is flexible. It’s not about saving every penny, but about saving and using them in the right places and at the right times, like a squirrel with photographic memory.
You can, quite literally, invest in anything. And no one knew that more than Vince Kosuga.
Vince Kosuga was an onion farmer living in upstate New York. He, like other farmers, liked to trade commodities on futures markets. While you can trade lots of things on futures markets, farmers are known to trade shares of their crops on futures markets, because it makes it possible for them to make a living as farmers.
Rather than heading to the farmer’s market every weekend, plenty of farmers promise a certain harvest of a crop by a future time and date, and investors will buy a futures contract, which entitles them to that harvest when the time comes. Farmers get the money upfront, which helps them maintain their farm and repeat the process, and produce distributors can get their supply at an agreed upon price.
What Vince Kosuga did (which wouldn’t be possible today, since futures markets are now electronic and completely public), was secretly buy up all the futures contracts for onions that he could get his hands on. At the end of his shady dealings, he held ownership of 97% of the onions within the United States. And he made a killing.
Now, that’s not to say that he was a good guy—because he wasn’t. He was greedy and he strong-armed anyone and everyone who was interested in buying onions. Because he controlled the market, buyers had to agree to his prices.
But what was funny to me was that on the day that Kosuga had to collect the harvest of onions at the Chicago Mercantile Exchange, 30 million pounds of onions were delivered to Chicago. They covered loading docks, spilled over the backs of trucks—they were everywhere.
They brought so many onions, that at one point, they all had to be shipped upstate to be cleaned to prevent spoiling, and then brought back down to Chicago to be sold. It was absolutely ridiculous, but the reason I’m telling you this is because I want you to know that finance is a world full of possibilities It doesn't only have an impact on us—we also have an impact on it. It takes two to tango, and you’ve got more power in the finance world than you know.
To this day, because of Kosuga, onions are the only commodity not allowed to be traded on futures markets.
The other story I came across was an article about how young TikTokers interested in investing are copying the same investment moves as people in Congress—specifically, Nancy Pelosi’s husband—Paul Pelosi.
Investors have noticed a trend where Paul Pelosi’s investments yield positive results. Rather than reinventing the wheel, these TikTok investors simply copy Pelosi’s investments. Naturally, this means that whatever Paul Pelsoi is investing in is going to go up in value, because several people are following in his footsteps.
While copying investments verbatim isn’t something I recommend, it just goes to show that there’s always room to grow your money without making it too complicated.
And if investing with TikToks and futures markets is possible, then so is investing in a home. In fact, you don't even need to make a 20% down payment. With the right credit score (700+), you can make a 3% down payment and save yourself thousands when you decide to become a homeowner.
Moves are being made to take into account student debt and positive rental history to make home buying more affordable. Other initiatives include Fannie Mae's new co-borrower rules to qualify more home buyers. Not to mention all of the work the FHFA has done to help current homeowners exit forbearance, the QM rule set to go into effect in 2022, and much more.
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