Liz Claman
Liz Claman
Liz Claman joined FOX Business Network (FBN) as an anchor in October 2007. Her debut included an exclusive interview with Berkshire Hathaway CEO and legendary investor Warren Buffett.
Before joining FBN, Claman served as an anchor at CNBC, most recently anchoring Morning Call and Cover to Cover. During her time at CNBC, Claman has interviewed major financial newsmakers, including Warren Buffett, Commerce Secretary Carlos Gutierrez, and former Treasury Secretary John Snow. She has also anchored Wake Up Call, Market Watch, and Today's Business. In addition, Claman is the author of "The Best Investment Advice I Ever Received: Priceless Wisdom from Warren Buffett, Jim Cramer, Suze Orman, Steve Forbes, and Dozens of Other Top Financial Experts" (Warner Books 2006).
Before CNBC, Claman served as an anchor and reporter for Boston's WHDH-TV (NBC). She was also a contributing correspondent for NBC's syndicated daytime program RealLife. Prior to that, she anchored a two-hour daily talk show, The Morning Exchange for WEWS-TV (ABC) in Cleveland. She received an Emmy for her work on The Morning Exchange.
A graduate of the University of California, Berkeley, Claman began her on-air career at WSYX-TV (ABC) in Columbus, OH as a reporter and later a weekend anchor. Earlier, she was a news associate for KCBS-TV (CBS) in Los Angeles where she was the youngest person in the station's history to win a local Emmy Award for Best Spot Producer.
FOX Translator
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Welcome to the major leagues of debt. Collateralized debt obligations, almost always referred to as a CDOs, are horrendously
complicated deals that often leave anyone without a MBA wondering what was put into these CDOs.
The first thing to understand about bonds, (aka debt) is that bonds are often backed by something else. Think about your home
mortgage. If you don't pay your mortgage, the bank can take the house. You end up homeless, and the bank sells the house to
pay off the rest of that mortgage. There is something "backing" that mortgage; something lender can fall back on, if you don't
pay your bills like a good human being. That's called collateral.
CDOs are one flavor of an entire sector of investing called structured finance, and they are also backed. CDOs, in the simplest
concept, are just bonds backed by something else. In most cases, a CDO is backed by a collection of various types of debt.
CDOs can be home mortgages, or other types of debt like credit cards, auto loans, and personal loans. Most of these types
of debt are usually considered a bit more risky and they don't have the backing that a home loan does. So, if you think it
through, you can imagine that CDOs are usually considered a risky investment.
To take a step further, understand that CDOs have multiple flavors within each CDO. These flavors are called tranches. If you've taken French, you might recognize the word, it means "slice" or "portion." Each slice of that CDO you invest in is a little different and carries different amounts of risk.
You could invest in the lowest risk tranche of the CDO, which would provide you lower risk. But, you don't get a good return
on that investment. Or, you can be the heroic adventurer of bonds and invest in the lowest-grade tranche of the CDO. You'll
make an amazing return, but if the economy even looks at you wrong, you might lose the entire investment.
CDOs aren¿t easy, and are almost always invested in by mutual funds, insurance companies and hedge funds. As an individual
investor, you will probably not come across a CDO you can participate in.
