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Taleb the Pundit?

Andy Spero | August 24, 2010 | 0 Comment(s) |

There is an interesting article in the Money & Investing Section of today’s edition of The Wall Street Journal, entitled Taleb’s Pessimism Lures CIC.

In it, the reporter, Jenny Strasburg, writes about Nassim Nicholas Taleb and a hedge fund, Universa, with which he is associated.

We particularly like this quote she attributes to Mr. Taleb, “Stocks are not a robust investment (sic). Make sure you have a garden that bears fruit.”

We like it because we can’t tell whether Mr. Taleb is serious, or not. We’ll explain.

If you… Read the rest

It’s the Uncertainty, Stupid.

Andy Spero | June 22, 2010 | 0 Comment(s) |

Small version of two very different bell curvesWe’re a couple days late in mentioning it, but if you haven’t seen the excerpt of the new book, Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis, by Anatole Kaletsky, we suggest that you read it.  The excerpt, The Benefits of the Bust, was published in this past Saturday’s edition of The Wall Street Journal.

Much of it deals with the inadequacy of economics as a science, including economists inability to say anything relevant about the financial crisis and the implications about various proposed solutions… Read the rest

Good (Late) News from the SEC

Andy Spero | January 25, 2010 | 0 Comment(s) |

We Missed It a Few Months Ago

On the front page of the The ‘Money & Investing’ section of today’s edition of The Wall Street Journal, there is an article entitled, At SEC a Scholar Who Saw It Coming.

The article is about Henry Hu, who manages the newly-formed Risk, Strategy and Financial Innovation division at the SEC.

Though he sounds like a good guy, we don’t know much about Mr. Hu, but that’s not why we’re writing. It also mentions that in November, Mr. Wu hired Richard Bookstaber… Read the rest

An Out-of-this-World Analogy

Andy Spero | July 25, 2009 | 0 Comment(s) |

The physicist Michio Kaku has a short opinion column in Thursday’s edition of The Wall Street Journal: Jupiter Gets a Black Eye. In it, he mentions the Jupiter’s recent collision with a comet or asteroid–it created a fireball as big as the earth–and then discusses our planet’s vulnerability to relatively large and unknown space objects.

We like the column because it provides a nice–though not complete–analog of risk management at financial institutions. Actually, this is one instance where the government may do it better. (Wow, we can’t believe that… Read the rest

Of Rats and Men

Andy Spero | July 3, 2009 | 0 Comment(s) |

We are in the midst of writing a rather long post on the similarities between teenage girls with low blood sugar and daily and intra-day changes in equity prices. Namely, one can see huge swings in behavior, attitudes, and mood caused by seemingly very minor underlying events, e.g., “she looked at me the wrong way.” The “she” in this case being an eight-year-old sister.

However, we couldn’t complete that post because another thought keeps diverting our (limited) attention from it.

We were driving with the Chairman earlier today when she… Read the rest

Computer Problems

Andy Spero | June 17, 2009 | 0 Comment(s) |

Despite a few interesting weeks of activity in the world, we have not posted much lately. That’s because we’ve had a variety of computer problems at world headquarters. We woke up last Wednesday morning to a BSoD or Blue Screen of Death on our desktop/network server.   Our Western Digital Raptor hard drive had failed. It was unbootable and inaccessible.

We replaced it the following day with a bigger and slightly faster VelociRaptor.

At the same time, we decided to upgrade from Windows XP (Media Center) to Vista Ultimate. As… Read the rest

Incentives and the Financial Crisis

Andy Spero | May 29, 2009 | 0 Comment(s) |

There’s an excellent opinion column in yesterday’s (May 28) edition of The Wall Street Journal. It is Crazy Compensation and the Crisis by Alan S. Blinder.

Why do we write that it is “excellent” the dear reader may ask?

Well, for the obvious (and self-serving) reason that we have been writing the same critiques on these pages for much of the past year or so.

Mr. Blinder identifies several problems that created the potential for the crisis and its subsequent realization.1 We will categorize the problems that he identifies… Read the rest

Uncertainty: In God We Trust

Andy Spero | May 25, 2009 | 0 Comment(s) |

Mary Anastasia O’Grady has a good interview with Richard Fisher, the president of the Dallas Federal Reserve, in this Saturday’s edition of The Wall Street Journal. It is called “Don’t Monetize the Debt“.

Rembrandt's Storm on the Sea of GalileeRegular visitors of our site, who are sympathetic to our criticisms of the Fed; elected and appointed government officials; and financial regulators, will find much with which to agree.

We’re writing today to mention a few parts that are directly related to our site. First, per our motto in the header, Thought before Calculation,  Ms. O’Grady writes:… Read the rest

The Difference Between Risk and Uncertainty

Andy Spero | May 14, 2009 | 0 Comment(s) |

Recently, we’ve noticed a substantial number of visits referred by search engines from folks trying to understand the difference between risk and uncertainty. In fact, we have a post from April 20, with the tongue-in-cheek title of Learning the Difference Between Risk and Uncertainty, or not.

In that post, we criticize financial firms because they don’t seem to have changed their uncertainty management tactics or methodologies despite the market upheavals and shocks of the past few years.… Read the rest

Saint James and the Fragility of Life

Andy Spero | March 18, 2009 | 0 Comment(s) |

When we criticize risk management and discuss our take on Uncertainty Management (our essay is subtitled, “How Trading is Like Playing in a Culvert on a Hot, Sunny, Summer Day”) we often cite our favorite quote from St. James’ only Epistle:

Come now, you who say, “Today or tomorrow we shall go into such and such a town, spend a year there doing business, and make a profit”—
you have no idea what your life will be like tomorrow. You are a puff of smoke that appears briefly and… Read the rest

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