Financial Fog

By |2018-12-04T17:39:53+00:00December 4th, 2018|Global Market Update|

Have you ever felt like you’re stumbling in the dark? Photo: Freephotos.cc. Source: Picography A few years ago, my wife and I made a long drive on a deeply foggy night. It was hard. The fog reflected the headlights back at us, dazzling our vision. Otherwise, the thick fog made the night especially dark. It felt like we were driving inside a ping-pong ball. I was so relieved when we arrived safely, but it took a while to unwind. Sometimes it can feel that [...]

Receiving Guidance

By |2018-06-25T17:01:00+00:00June 25th, 2018|Global Market Update|

Why do companies provide quarterly earnings guidance? Photo: Michael Richter. Source: Morguefile Every few months we hear about companies that beat expectations for their quarterly earnings, or fall short, or do something different. Sometimes there are business combinations or spin-offs that confuse the issue. Other times the accounting profession changes the way corporations need to report their financial numbers. Some CEOs criticize the market’s quarterly earnings derby. They note that quarterly earnings reports are more art than science. Quarterly numbers aren’t even audited – [...]

Odds-On Investing

By |2018-04-18T06:27:32+00:00April 18th, 2018|Global Market Update|

“Don’t tell me the odds.” Photo: Michael Parzchowski. Source: Unsplash That’s how a lot of people approach gambling. For them, it’s entertainment. The risk associated with placing a bet and waiting for the outcome creates a certain exhilaration, independent of the outcome. It’s why slot machines and horse tracks are so popular, even people know that the odds are against them. People don’t want to know the odds because that information detract from the excitement. It’s fun to dream of making that big score, [...]

Looking for Risk in All the Wrong Places

By |2017-11-15T07:11:22+00:00November 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 [...]

Seeking Safety

By |2017-07-17T16:45:21+00:00July 12th, 2017|Global Market Update|

Are there any safe places? Photo: Ben Tubby. Source: Wikipedia During the Cold War the superpowers relied on a doctrine called “Mutually Assured Destruction,” or MAD. The idea was that neither party would initiate a nuclear first strike, because enough of the other side’s nuclear arsenal would survive to retaliate. The global devastation would be so complete that both sides would lose. To average folks, the doctrine seemed “mad,” indeed. There was a low-grade fear surrounding everyday life. If someone irrational got hold of [...]

Where the Black Swans Hide

By |2017-07-17T12:21:20+00:00May 1st, 2017|Global Market Update|

What is a “Black Swan”? Photo: Sergio Valle Duarte. Source: Wikipedia A Black Swan event is a development that comes as a total surprise, has a major impact, and that we later see as inevitable – with the benefit of hindsight. The term was popularized by the author Nassim Taleb, and it is based on an ancient Latin expression that assumed all swans were white. After Europeans discovered black swans in Australia, however, the phrase was revised. Taleb notes that many – if not [...]

French Lessons

By |2017-07-17T12:21:28+00:00March 1st, 2017|Global Market Update|

And people thought our Presidential election was wild. Source: Marine 2017 Election season in France has generated one surprise after another. The first round in their Presidential race occurs April 23rd. Currently, there are 10 contenders. Marine Le Pen – the French Nationalist candidate – is leading in the polls with 27% of the vote. If no candidate wins a majority in the first round, as seems likely, there will be a run-off vote between the two leading vote-getters on May 7th. Parliamentary elections [...]

Re-Thinking Brexit

By |2017-07-17T12:21:41+00:00October 5th, 2016|Global Market Update|

Can uncertainty cause a recession? Source: Econlib Economists are always looking for ways to test their theories. They can’t put economies into test tubes and sprinkle a little stimulus on them—they have to look for natural ways to examine how people react economically to new conditions. So they study businesses right near a state border to see if changing the minimum wage law has much impact, or they use the draft lottery to study the effect of military service on lifetime earnings. The Brexit [...]

On Tips and Tipping (Part 2)

By |2017-07-17T12:21:53+00:00July 21st, 2016|Global Market Update|

On Tips and Tipping (Part 2) Everyone wants a tip. What’s the best way to make money? Photo: Nick Stanley. Source: Life of Pix Profitable investing starts with a plan. It starts with investors reviewing their goals, their fears, how much time they have, how much access to their money they need, and other circumstances. No one plans to fail, but many people fail to plan. And if you don’t know where you’re going, any road will do. But once you have a plan, [...]

Certain About Uncertainty

By |2017-07-17T12:21:58+00:00May 5th, 2016|Global Market Update|

How is investing like backgammon? Photo: Katana. Source: Morguefile Both involve uncertainty. Both are highly quantitative. And both combine skill, strategy, and a bit of luck. I loved backgammon growing up. I could play for hours with family and friends. I read books and studied different board combinations. I even organized a couple of tournaments in college. I loved the fast pace and exciting finishes, and learned a lot. I think the most important skills I gained were knowing how to work with uncertainty [...]