A clever post by Elizabeth Warren at Credit Slips keys off, of all things, a discussion by mystery writer Lisa Scottoline about her experiences with American Express and reward programs generally. Scottoline gives a colorful recap of her inattentiveness about paying on time and its predictable impact on her credit record (“My FICO score was […]
Read more...Today’s Wall Street Journal, in a page one story, tells how makers of high-end watches, such as Omega and Patek Phillipe, use actions to establish high price points for their wares by acting as anonymous shill bidders. Understandably, buyers who realized that the makers (ie, the sellers) were bidding against them, they were outraged: Demand […]
Read more...According to Bloomberg (hat tip 2Blowhards), well-groomed men do better financially than their rumpled peers. And contrary to popular perception, the impact is greater for men than women. Note that the study measured time spent on primping, and made no effort to assess the efficacy of those efforts. Perhaps the seemingly lower economic impact of […]
Read more...We’ve never understood why regulation has such a bad name in America. Yes, there are all kinds of terrible specific implementations of the concept “regulation.” But the difficulty of getting it right doesn’t mean the concept should be rejected out of hand, since it turns out the alternative of “no regulation” isn’t so hot. And […]
Read more...Today in the Financial Times, John Authers provides a tidy example of investor irrationality: Why do some stocks do better than others? There can be many reasons but one, it appears, could be a change to a new and catchier ticker symbol. On August 24, Sun Microsystems announced that it was changing its ticker from […]
Read more...Hedge funds, which even at their peak of popularity, were regarded with considerable suspicion, have taken a shellacking in the last few months as subprime tainted funds have folded or reported poor results, and “quant” strategies have failed spectacularly, due to extraordinary, allegedly unprecedented market turmoil. Of course, the problem with that defense is that […]
Read more...It’s summer rerun time. By happenstance, I came across a May post, which referred to a Federal Reserve study that had found that risks of hedge funds pursuing highly correlated strategies appeared, by some measures, as high as before the LTCM crisis. We had thought the Fed might be making a mistake in dismissing its […]
Read more...I am reading a very useful primer, “Cognitive biases potentially affecting judgment of global risks,” by Eliezer Yudkowsky, one of the contributors to the blog Overcoming Bias (we made use of one of his posts yesterday). He focuses on existential risk, meaning risks to human existence. Since many people would regard an economic collapse as […]
Read more...Even though the Fed cut the discount rate to 5.75%, and more important, said it was concerned about risks to growth, asset backed commercial paper, which is the epicenter of the credit shock, is being placed at newly high yields: 5.99%, which is now above the discount rate. And remember, not only has the Fed […]
Read more...The New York Times, among others, endeavored to shed more light on why quantitatively oriented funds like Global Alpha (down 26% YTD), Cliff Asness’s AQR (down 13% in August) and James Simon’s Renaissance Technologies (down 7% YTD) are doing so badly. Short answer: these funds rely on models that look at statistical norms, and these […]
Read more...John Kay, in an interesting but somewhat discursive opinion piece in the Financial Times, compares the structuring of complex securities to alchemy, with all its negative connotations. He points out that the elaborateness of the models has the effect of obscuring risks that would be more apparent otherwise, namely, that if you believe markets are […]
Read more...Our colleague Susan Webber of Aurora Advisors has a new article, “Fit vs. Fitness,” in the current issue of The Conference Board Review. The editors were initially skeptical that anything new could be said on the subject of the glass ceiling, but this article persuaded them otherwise. We hope you’ll agree. She draws on personal […]
Read more...Floyd Norris has an article in today’s New York Times, “Market Shock: AAA Rating May Be Junk,” that is enough off the mark to be annoying. The problem with the article isn’t so much inaccuracy as superficiality. Norris points out correctly that a lot of buyers are waking up to the unpleasant reality that that […]
Read more...Readers of this blog know that I have been concerned about the state of the credit markets for some time. We’ve had (until the last month or so), rampant liquidity feeding asset bubbles in virtually every asset class except the dollar and the yen, tight risk spreads (that means inadequate compensation for risk assumption), lax […]
Read more...John Dizard, who writes a pretty-much-weekly column for the Financial Times, typically presenting an exotic investment idea, has long given me the impression he spends much of his day gossiping with people on trading desks. Which means he is very much plugged in, and some of the remarks he makes in passing can be more […]
Read more...