Looking for Risk in All the Wrong Places

By | 2017-11-15T07:11:22+00:00 November 15th, 2017|Global Market Update|

Can Artificial Intelligence really manage risk? Source: Wikipedia There’s a new application for Artificial Intelligence. It’s called regulatory technology, or “regtech.” It takes the rulebook of a supervisory agency, like the FDIC, and translates it into a computerized logic engine. The regulators evaluate the logical consistency of their rules, and the banks structure and label their data to be queried. This allows the regulator to look for broad patterns in the data that might not be immediately apparent. AI can identify deep, dynamic structures [...]

Apocalypse Now

By | 2017-11-14T06:52:40+00:00 November 14th, 2017|Global Market Update|

Are we regulating local retailers out of existence? Photo: Jonny. Source: Granola Shotgun There’s a recent story about a family in California that bought an old fire station for $250,000 with a view toward converting it into a bakery and micro-brew pub. This could be a very attractive retail business that would help revitalize a blighted part of their town. They were surprised to learn that they would have to spend almost $350,000 on sidewalks, curb-cuts, parking, storm drains, handicapped access, landscaping – and [...]

Where the Light Is?

By | 2017-11-13T07:10:05+00:00 November 13th, 2017|Global Market Update|

Are investors looking for success in the wrong places? Photo: Jorge Diez Recio. Source: Morguefile There’s an old story about a man searching for something under a streetlight. A police officer comes by and asks what he’s lost. The man replies that his keys fell out of his pocket and he can’t get back into his house. After a few minutes searching together, the policeman inquires whether the man is sure he lost his keys under the lamp. No, the man replies, he lost [...]

One Shot

By | 2017-11-10T07:09:03+00:00 November 10th, 2017|Global Market Update|

We each get one shot. Promotional Poster. Source: Wikipedia Early in the hip-hop musical “Hamilton,” the title character sings, “I’m not throwing away my shot.” The catchy tune is mesmerizing, and it’s reprised several times throughout the play. It’s both iconic and ironic. At the end of the play – as in real life – Hamilton throws away his shot in his duel with Aaron Burr, and is then killed by Burr’s bullet. It reportedly took playwright/composer/lyricist/director Lee-Manuel Miranda over a year to write [...]

Looking Backward, Looking Forward

By | 2017-11-09T07:31:27+00:00 November 9th, 2017|Global Market Update|

Have we learned anything? Sketches of Janus, Roman god of beginnings and endings. Source: Wikimedia Ten years ago the world experienced a series of financial cataclysms that resulted in the longest and deepest recession since the Great Depression. It started in August 2007, when BNP Paribas announced that they were suspending redemptions on three of their most aggressive real-estate-linked mutual funds. Real estate prices had been falling for over a year, and the market for many mortgage-backed securities was drying up. BNP couldn’t raise [...]

Double Entry Computing

By | 2017-11-08T06:07:43+00:00 November 8th, 2017|Global Market Update|

Why is finance so dumb? Photo: Helloquence. Source: Unsplash In an era of mobile computing and 3-D printing, financial analysis is stuck in the ‘80s. The principal tool of the analyst is the spreadsheet -- something that Lotus 1-2-3 popularized in 1983. While our PCs can access big data and execute cloud-based massively parallel computing, spreadsheets still have the same machine-code A1 cell-structure. The most advanced Excel function is a macro. Consequently, finance hasn’t moved past summing up columns and rows. Predictive algorithms and [...]

The Merchants of Venice

By | 2017-11-07T07:14:52+00:00 November 7th, 2017|Global Market Update|

Whatever happened to Venice? Piazza San Marco, by Canaletto. Source: Metropolitan Museum of Art Venice used to be one of the richest cities in the world. After the fall of the Roman Empire, the world devolved into competing factions. There was no uniform standard of exchange, and no central authority. But trade in spices, grains, cloth, and slaves was booming. By 1330, Venice was as big as Paris, and probably three times the size of London. One of the keys to Venice’s success was [...]

Luxurious Detention

By | 2017-11-06T08:00:06+00:00 November 6th, 2017|Global Market Update|

What’s happening in Saudi Arabia? Saudi Emblem. Public Domain. Source: Wikipedia Over the weekend the Saudi government detained dozens of the country’s most powerful princes, military officers, businessmen, and government officials. Included in the sweep is prince al-Waleed bin Talal, one of the world’s wealthiest individuals, worth over $16 billion, by some reports. Also taken into custody were two sons of the late King Abdullah, who might have been considered possible rivals to Crown Prince Mohammed bin Salman. A committee has now been established [...]

Factoring the Future

By | 2017-11-03T07:33:23+00:00 November 3rd, 2017|Global Market Update|

What is “Factor Investing”? Starshine 3 Satellite. Source: NASA Factor investing is a different way to slice and dice a portfolio. You may have a bond portfolio made up of Government, Corporate, and Foreign Bonds. But the returns they generate come from different factors: their length, their default risk, and the risk of their being called – their duration, credit, and convexity. In the same way, a stock portfolio can be examined from multiple angles: where the companies are located is one axis – [...]

Bad News Bears?

By | 2017-11-02T07:44:19+00:00 November 2nd, 2017|Global Market Update|

Do you want the good news or the bad news? Photo: Anthony Delanoix. Source: Fancycrave Most of us want to get the bad news out of the way, then hear the good news. After all, who wants to leave a meeting depressed and upset? But people delivering the news usually want to start with the good news. We may be anxious about have a conversation, and we want our friends to be happy. Maybe something will interrupt us and we’ll get to the bad [...]