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The difference between 'bankers' and 'investment bankers'
Manage episode 300154114 series 2963994
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00:25 - What does a traditional banker do?
02:13 - What does an investment banker do? They put risk on other people and create a monetization path for non-monetary forms of capital.
04:07 - The peruvian economist Hernando De Soto wrote The Other Path. Chris uses his examples of home titles as something to leverage for capital creation. Investment bankers can take non-financial forms of capital and convert them into financial capital.
06:14 - When an investment banker does their job properly, they create financial capital where there was no capital before, and they create liquidity, which is the free flow of money between parties.
06:31 - The temptation of an investment banker, however, is to financially benefit even if you don't. They need a transaction to happen, whether it benefits the parties at all. They get paid on fees.
08:16 - Investment bankers allow ordinary people to take a view (and make decisions) on future risk and reward. Investment bankers give people the opportunity to take risks they otherwise could not take.
09:19 - Investment bankers are essential, but be careful with them.
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