Book Review: Backstage Wall Street
I have long wanted to see a book that would teach ordinary investors how to avoid being cheated by those that create/sell financial products. If this book isn’t it, the one that surpasses it will be astounding. If Wall Street is a show, this book gives you a peek behind the curtain. This book is...
Sorted Weekly Tweets
Central Banking Norway Faces Housing Bubble as Krone Steals Policy Agenda http://t.co/15hzb0So By cheapening the currency Norway gets an asset bubble $$ Mar 17, 2012 Unintended Consequences http://t.co/eLrKtCJc Sprott suggests that the financial system has a chemical dependency on the Central Banks. $$ Mar 17, 2012 Is the bond market tightening for the Fed?...
Book Review: Pandora’s Risk
This is two books in one, and very well done. The main part of the book explains risk and uncertainty in general terms, such that most people can understand it. But for those that can deal with complex math, the latter part of the book offers a lot of additional firepower. Risk is a tough...
Against Risk Parity
Many investment ideas are promising so long as few do them. Yes, there is an opportunity, but it is limited. “Shh, don’t tell everyone about it.” Thus, the concept of “risk parity.” Lever every asset class up until it has the same volatility as common stocks. Under theoretical conditions, one could make extra money doing...
We Eat Dollar Weighted Returns — III
Somebody notify the Bogleheads, they will like this one, or at least Jack will. Yo, Jack, I met you over 15 years ago at a Philadelphia Financial Analysts Society meeting. How bad are individual investors at investing? Bad, very bad. But what if we limit it to a passive vehicle like the Grandaddy of all...
The Rules, Part XXX (30)
In the recent run-up, there was talk of the infallibility of equities. This led to a higher level of variable compensation in the economy through option and share issuance and low pressure to raise fixed wages. This was yet another form of hidden leverage, which hid the unprofitability of enterprises through share dilution. That was...
The Rules, Part XXVII, and, Seeming Cheapness vs Margin of Safety
The market takes action against firms that carry positions bigger than their funding base can handle. Temporarily, things may look good as the position is established, because the price rises as the position shifts from being a marginal part of the market to a structural part of the market. After that happens, valuation-motivated sellers appear...
Risk-Based Liquidity
When there is financial failure, it comes as a result of illiquidity. Now, truly, these parties are insolvent, because they took the risk of not being able to pay cash when it was due. Illiquidity and insolvency are really the same thing, though many obfuscate. If you can’t pay cash, it doesn’t matter what your...
Risk-Based Liquidity
When there is financial failure, it comes as a result of illiquidity. Now, truly, these parties are insolvent, because they took the risk of not being able to pay cash when it was due. Illiquidity and insolvency are really the same thing, though many obfuscate. If you can’t pay cash, it doesn’t matter what your...
Get a Piece of the Schlock
There is a benefit to reading books on marketing for those that will never be marketers: it will immunize you to sales pitches. Think of it as studying the strategies of the enemy. When you talk to salesmen, you can flip their words back at them, or tell them “no,” to the questions that have...
Book Review: Manias, Panics, and Crashes (Sixth Edition)
This is the first book that I have reviewed twice. I reviewed the third edition of the book previously, but I am reviewing the sixth edition now. Kindleberger places the manias, panics, and crashes on a common grid, to see their similarities, In it he draws on a number of common factors: Loose monetary...
Bubbles are Easy to Spot, well almost…
Bubbles are easy to spot. Wait, don’t most people say that bubbles are impossible to spot? I’ll say that again: bubbles are easy to spot. Why? People have the wrong theory on bubbles. They listen to those that don’t understand the efficient markets hypothesis, and think, “Prices are always fair predictors of the future. I...
