Friday, December 18, 2009
In the mid 1990s, some of the brightest stars of the investing and academic universe came together to found Long Term Capital Management - the ultimate low-risk hedge fund. This was the death knell for the shoot from the hip investment broker type. Wall Street was now in the hands of the quants (people who believed in quantitative analysis to the exclusion of everything else).
Or so they thought. Using data from decades of Wall Street futures, options and equity prices, LTCM deceived themselves into thinking they had discovered immutable laws of the universe. If a price deviated from the historical norm, LTCM rushed in to make up the difference. After all, wouldn't the market eventually come to its senses, thereby benefiting the hedge fund?
The trouble with the universe, is that it is always evolving and developing new norms. LTCM began life with stellar performance. But over-reliance on mathematical models that were fundamentally incomplete ultimately spurred fantastic losses. Billions of dollars went up in smoke.
This experience in the late 1990s completely changed Wall Street. Gone were hubristic, mathematical Rube Goldberg-esque models of the universe, backed to the hilt with ridiculous amounts of leverage. Well actually, that didn't happen.
When Genius Failed, The Rise and Fall of Long-Term Capital Management is gifted financial writer Roger Lowenstein's account of the big electronic money bonfire that was LTCM.
Read it for a critique of quantitative analysis as well as deepening your sense of Wall Street history. You'll be less likely to fall for the latest thing.
Monday, November 23, 2009
The World Economic Forum is one of those nebulous organization that publishes information and lists like this (most competiveness economies). They have a mysterious compound in Switzerland. One halfway expects to see armed guards milling around as the top of the building opens and a death ray machine pops up....
Here's a good link to more detailed country information and how they made the list. In between sipping Tokay and dispatching Number Two to a sauna in the English countryside.
Nevertheless the snark, take a look at the list because it will give you some ideas about what makes a good economy and how to sift different factors in the information soup.
FWIW. Reading other people's analyses will help you with your own.
Friday, November 13, 2009
Here's my favorite way to get LIBOR - on Bloomberg.
Oh right, we also have it in ECONOMAGIC. This link contains different currencies and time horizons.
Friday, November 6, 2009
I love the humorous and accessible writing in this book. It's a greatest hits of statistical sleights of hand and snake oil medicine.
You may already know concepts like median, mean and mode, but I'll wager that your statistics professor didn't spend too much time on how they are misused in the real world.
And folks, these tricks, get used over and over again, year-in and year-out. After reading this book, I can spot this stuff in the news everyday.
One of my favorite bits: the section on typical graph tricks (you'll have to check it out!)
Friday, October 23, 2009
This is an acclaimed BBC series about the development of modern marketing based on psychological principles.
The excerpt above covers the origin of the focus group format and the psychological methods used to prompt people to buy products.
Go beyond your assignments and learn the real story behind marketing.
Thursday, October 22, 2009
Friday, October 16, 2009
Wednesday, October 14, 2009
The easiest way to do this is to check the NASDAQ (EVEN FOR STOCKS THAT ARE NYSE-LISTED) website.
If you are interested in long and short interest in commodities, check out the official Commitment of Traders link here.
Tuesday, October 13, 2009
So let's do another one.
Peter Bernstein's Against the Gods, The Remarkable Story of Risk.
Here's what Publishers Weekly said about this title:
Risk management, which assumes that future risks can be understood, measured and to some extent predicted, is the focus of this solid, thoroughgoing history. Probability theory, pioneered by 17th-century French mathematicians Blaise Pascal and Pierre de Fermat, has made possible the design of great bridges, electric power utilities and insurance policies.
The statistical sampling methods invented by dour Swiss scientist Jacob Bernoulli undergird diverse activities such as the testing of new drugs, stock-picking and wine tasting. Bernstein (Capital Ideas) animates his narrative with a colorful cast of risk-analyzers, including gambling addict Girolamo Cardano, 16th-century Italian physician to the Pope; and John Maynard Keynes, whose concerns over economic uncertainty compelled him to recommend an active, interventionist role for government.
Bernstein also traces the development of business forecasting, game theory, insurance and derivatives, and surveys recent advances in risk forecasting made possible through chaos theory and by the development of neural networks.
Tuesday, October 6, 2009
The resemblance to candlesticks gives this method its name. Seen together on a chart, the candlesticks reveal the same information - and sometimes more - that Western technical analysis does. It's quicker visually to grasp and the patterns have great names like "gravestone," "shooting star," and "spinning tops."
Candlestick charting is great for determining market direction and particularly useful to short-term traders.
I have ordered more candlestick charting books, but here's a link to our current holdings.
Friday, October 2, 2009
My favorite way to do this is through the Mergent database. Find your company, select financials and then choose income statement (see below):
By the way, the above example is Apple.
The 1980s are the prototypical Wall Street decade. The country had emerged from a lengthy slumber marked by stagnant growth and a bear market.
Many of the high profile deals of the 1980s were in fact part of a massive industrial reorganization of America. It was the age of the junk bond, leveraged buy-outs and hostile takeovers.
Barbarians at the Gate covers one aspect of that story: the machinations surrounding the massive 1988 RJR Nabsico leveraged buy-out. It's a titanic struggle of egos between CEOs and corporate raiders as both sides want to take the company private and line their pockets as well.
Read this book to better understand corporate finance, learn about the origins of modern Wall Street dealmaking, and read a business book you will be expected to know. Plus, it's a good time with classic real-life Wall Street sleazeballs!
Thursday, October 1, 2009
Wednesday, September 30, 2009
Lewis recounts his adventures in learning to trade the market, the profane culture of the brokerage, and playing Machiavellian office politics. It's pretty dramatic, with lots of high stakes deals, backbiting and secret alliances, and the stench of greed. It's also how the financial world operates.
Read this book if you want to understand the mentality of trading, the culture of Wall Street, and learn about how money flows in the financial world.
Friday, September 25, 2009
1. Go To Europa. 2. Select Country 3. Country Statistics 4. External Trade
Far greater detail and up-to-the-minute data is available in Faostat and Usa Trade Online (UTO is unfortunately accessible only on the 4th floor of the library). I'll post on those another time.
But Europa is a quick way to find general numbers.
Friday, September 18, 2009
These are regulations like how many parking spaces per resident your apartment complex must have, keeping animals, and environmental regulations.
San Marcos Municipal Code LINK
Or, search for the code of your preferred city.
Tuesday, September 15, 2009
This is the book that summarizes current economic conditions in different areas of the country. It's a little general in content, but it's often referred to by economic commentators.
Heard about the baby sitting article yet?
So today's food-for-thought piece is a famous academic journal article about a group of young families in need of a babysitter. They made coupons that could be redeemed for one night of baby sitting, and....then something unexpected happened.
And this is what people are talking about when they mention "the baby-sitting article."
Thursday, September 3, 2009
Taleb is concerned with black swans, i.e., unpredictable and improbable events that have great impact. Among the examples of these he cites are the rapid spread of the Internet and the 9/11 attacks.
People endeavor to explain black swans after they occur, but they cannot do so in advance. Despite the crucial effects of these events, economists and other supposed experts in prediction fail to allow for them; indeed, their theories often deny their possibility.
Because of this failure, Taleb maintains that much business forecasting is useless. To him, only a few economists, e.g., Friedrich Hayek, grasp the vital importance of uncertainty and escape condemnation. Taleb extends his indictment of conventional approaches to risk, contending that the bell curve, a key tool of many standard theories, often fails to fit the actual world. He further posits that people tend not to cope with a black swan properly, tailoring their response to specific details of the incident rather than generalizing their response.
Wednesday, September 2, 2009
Go to ABI Inform and click on publications. Browse or find the exact title you want. If there's a RSS icon next to the publication title, you can create a RSS feed for that title.
After the RSS is created, click on the URL and you will see several options for receiving the feed.
FYI: A lotta other databases allow you to create alerts or RSS feeds. Look for the option.
Update: Hmmm....there might be a one day delay on the Wall Street Journal RSS feed....but it's still cool.
Sunday, August 30, 2009
LOTS ABOUT PRICING, CONSUMERS AND MARKETING.
I'll include an excerpt of the New Yorker review below:
When they examined how people deal with uncertainty, Tversky and Kahneman found that there were consistent biases to the responses, and that these biases could be traced to mental shortcuts, or what they called "heuristics." Some of these heuristics were pretty obvious -- people tend to make inferences from their own experiences, so if they've recently seen a traffic accident they will overestimate the danger of dying in a car crash -- but others were more surprising, even downright wacky.
When you walk into Starbucks, the prices on the board are supposed to have been determined by the supply of, say, Double Chocolaty Frappuccinos, on the one hand, and the demand for them, on the other. But what if the numbers on the board are influencing your sense of what a Double Chocolaty Frappuccino is worth? In that case, price is not being determined by the interplay of supply and demand; price is, in a sense, determining itself.
Wednesday, August 12, 2009
Here's how to find out this kind of information:
Our Simply Map and Local Market Analyst databases give you consumer information about local populations.
Here are some print options in the library:
County Demographics, the Rand McNally Marketing Atlas and Zip Code Demographics.
Finally, you could go online and use government census data from American Factfinder.
Lotta different ways to research this one. (update: watch the overall training video here. )
There is a great series called Who's Buying (just about anything). Most of these are located behind the reference desk.
Can't miss the Best Customers book.
Local Market Analyst is a good source.
Simply Map is a good source for seeing how consumers in your geographic area behave. Tutorial here.
MRI+ breaks this down. Watch the training video. This is a way to get some online data from a reliable source.
Don't forget to get the macropicture of your industry with industry surveys.
Monday, July 27, 2009
Lotsa cool stuff about the role of money and credit in shaping society and Niall makes it easy to follow. Recommended for you to get a sense of how this stuff works in real life.
You can watch the entire 4 part series on the official PBS web site here.
Part Four is dedicated to the current financialization crisis.
Thursday, July 16, 2009
Wednesday, June 24, 2009
David Einhorn: Fooling Some of the People All Of The Time (2008)
David Einhorn is a very well-regarded hedge fund manager. After finding irregularities in a company called Allied Capital's financial statements, Einhorn went short the stock. Einhorn discussed his position that Allied Capital was in trouble at public forums. Then the nightmare began. Allied Capital waged a personal war against Einhorn that involves issues of Einhorn's free speech and the perception of short selling as wrong and injurious to capitalism (it's nothing of the kind IMO).
The Securities and Exchange Commission (SEC) eventually caught up to Allied Capital (which has still not admitted to wrongdoing). This book is about the right to be unpopular and the integrity of the financial system.
Einhorn gives many colorful examples of his thought process in identifying accounting sleights of hand. The examples range over several different companies and decades. It's an eye opener for most of us.
Friday, June 19, 2009
So there's always a lot about forecasting and analysis of current conditions on these sites, but also some interesting, learned papers about various topics. Keep your eyes peeled for economists writing about cutting edge issues that haven't received a lot of information yet.