For the past six months we have wondered whether industrial firms have suffered or will suffer losses similar to those recognized by many large investment and commercial banks, bond insurers, and hedge funds.  While many industrial firms have faced difficulties during the past year, we don’t recall any of those firms reporting large losses due to investments in securities like MBS, CMBS, CDOs, etc.
Industrial firms have been and will […]

Note: we frequently criticize poor model-building in our posts and plan to do so in our essays, too.  Before we reiterate our criticisms we wish to be clear: we have nothing against mathematical or computer models per se.  In fact, we like it when we are paid handsomely to build, critique, or validate models.  It is just […]

Note: as should be clear, this is not a general criticism of liberals, only ones that write poorly reasoned columns.
While we have not had the good fortune to be part of any Vast Right Wing Conspiracy, we now have conclusive evidence that one exists.  This latest effort to discredit certain members of the left is being carried out by the editors of The Wall […]

In the book review column in today’s WSJ, Free to Choose, But Often Wrong, David Shaywitz reviews two books.  The second review is of Flirting With Disaster: Why Accidents Are Rarely Accidental.
Even a casual reader of our posts will realize that we find that subtitle to be particularly appealing.  However, given the review, we instead recommend Richard Bookstaber’s, A Demon of Our […]

Last week, we posted As Usual, They’re Not Serious. (#1) without the “(#1).”  Upon reflection, we realized that we had the first entry in what is likely to be a lifetime-long series of posts on governmental and bureaucratic foolishness. So, we have relabeled that post as a start of a new series with this being the second entry.
It […]

Or when is a “hedge” not a hedge?  —when it is a nedge or a sledge or a wild*** guess, of course.
To paraphrase St. Francis de Sales, the road to hell is paved with good intentions because execution matters!  (Elsewhere he scolds perfectionism, too, and argues for a balance: do not be rash, do not over-analyze.  Realize that […]

We saw the headline of an article in this weekend’s WSJ : “Agriculture Is Fertile Play for Investors,” and immediately thought of the old saw: “A fool and his money are soon parted.”¹  Just as quickly we thought well that’s not quite complete as a fool and other people’s money seem to separate even faster.
1. Attributed to the 16th century English […]

Update: If this topic is of interest, please see our more recent posts. Many provide better numerical illustrations of risk neutral probabilities: Implied Risk Neutral Probabilities (of Default) from August;  implied RISK NEUTRAL probability of default, redux from October 9; Risk Neutral Valuation: There Are at Least Two Expected Values from November 13; and Price Implied Default Rates from December 2. We also have […]

In an earlier post, D Pain of 7,500 Txt Msgs/Mth, we remarked on the challenges faced by the inventor of text messaging.  At that time, we retained a smidgen of sympathy for the man that has since evaporated.  Unless he is soulless, we would imagine that if deceased, he is spinning in his grave.  If alive, […]

Peggy Noonan has a very nice opinion column on the late Tim Russert in the weekend WSJ.  If you are not familiar with Ms. Noonan, you should be.  The former Reagan speechwriter is one of the most thoughtful, considerate, and articulate commentators in America and has been for quite some time.
Based upon her writings, we′ve inferred that she […]

We are now trying to generate publicity, and more importantly, gain paying clients.   Coincidentally, we′ve recently received a variety of e-mail comments regarding a few of our blog posts.
So, we thought it was time to invite friends of the site to register and post comments (subject to our approval, of course).
This is a business—more precisely, our business; so, we do […]

The WSJ has a nice article today about collecting DNA evidence and convicting burglars on the basis of it.  It might seem like overkill and the ACLU and a Harvard professor are against it.  In some circles, that should be enough to kill it, right?
Well, not quite.  Results from a pilot study show that such testing […]

On Tuesday, the Chairman walked into the office and asked whether we thought the losses and uncertainty in the financial markets were winding down.  We replied that we doubted it and, in addition, we hoped not. 
Our response was not out of envy or due to any schadenfreude.  Instead, it was based upon what we believe to be our mature, […]

In today′s Heard on the Street commentary in the WSJ, there is a small item at the bottom, Oil Hedge? Look at GM.  It mentions that a portfolio manager has calculated that in some unspecified recent period, for every dollar oil prices have increased per barrel, GM’s stock has decreased 18¢ per share.  There is no mention […]

Or how banking in ‘08 in Charlotte might be like steel in Pittsburgh in ‘72
We think there is a market for specialized, retained consulting services in smaller markets.  For example, financial firms in small markets often have difficulty—as evidenced by their long searches—finding experienced and knowledgeable workers willing to relocate to a town where the job in the […]