As you purvey the current carnage in the financial markets, it’s difficult not to get despondent. It is in times like these that we turn to music to help us lift our spirits, or wallow in self-pity. I can recommend the most...
Why crashes are a wonderful way to discern good investment strategies from bad managers.
Separating the proverbial “men from the boys” is a great exercise in times like these. When markets come under duress, is when you really find out who has got a good handle on their...
Why the Coronavirus may be the best thing that ever happened.
It really is difficult at the moment to talk about anything other than this horrible little virus that has come out of China and is holding the world hostage. There is real panic out there, and when half the...
A few weeks ago, we looked at the concept of tail risk, as exemplified by the outbreak of the Coronavirus. It seems the worst is not over, and financial markets have taken quite a beating in the last few days. Where do we go fro...
Why everything is relative when it comes to our wealth.
In the middle of the 19th century, the British empire was at its grandest. All around the world, there were outposts, colonies, and endless riches that were syphoned off to the capital of this vast and great realm....
Why negative interest rates may be as bad as they seem.
It’s the biggest elephant in the room ever, and it seems everyone has just accepted that it is so. But seriously, negative interest rates – doesn’t that go against everything we know? Don’t worry, we are not going...
The thing about gamma, is that it is very different to all the other categories of risk. Here, we want to take high risk, we want to punt, bet big, do crazy things, because it might just work, and we could win the lottery. I always find it amazing that people prefer to...
Remember beta? Well alpha, is something entirely different. Instead of buy, hold, and hope for prices to go up, what we are trying to do here is take advantage of opportunities that arise from inefficiencies in the global financial market place. But before we do that,...
Beta is very popular. Maybe that is because it is so easy to understand. We acquire assets at a price, and we hope that the value will increase. There can be many reasons why prices may go up: inflation, productivity, or general market growth. Consequently, there are a...
The term “structured” in of itself implies complexity, and there is nothing simple about coming to terms on lending arrangements involving very specific forms of collateral. Unlike a government or a corporation, the risk with lending on single assets or projects is ver...
