Letters Remain

Category: finance

  • Risk Analysis Education

    Ron Lieber of The New York Times asks, Could the current financial crisis be breeding an entire generation of risk averse traders? Kevin Brosious, a financial planner in Allentown, Pa., polled the students in his financial management class at DeSales University on the percentage of their portfolios they would allocate to stocks right now. The…

  • Are the Risk Appetites of Successful Traders Innate?

    Given that confidence and risk tolerance are correlated with high levels of pre-natal testosterone, John Coates—Wall Street trading floor manager turned academic—wondered if the behaviour of high-frequency, successful traders is similarly influenced, and thus innate. Unsurprisingly it was; but it was the extent to which it was found to be true that was surprising: Coates,…

  • Warren Buffett’s Letters to Berkshire Hathaway Shareholders

    Warren Buffett’s letters to the shareholders of Berkshire Hathaway are read and quoted widely, coming to be regarded as one of the most important annual publications in the business and investing world. Over the years the letters have covered, in quite some detail, almost every important aspect of investing. The (incredibly lacklustre) Berkshire Hathaway website provides…

  • The Anatomy of Gullibility

    In the aftermath of the Madoff Ponzi scheme, psychologist Stephen Greenspan writes in The Wall Street Journal on why we continuously fall for financial scams—and in the process describes the ‘anatomy’ of gullibility. Gullibility is a sub-type of foolish action, which might be termed “induced-social.” It is induced because it always occurs in the presence…

  • The Myth of Moral Hazard

    The economic theory of moral hazard is “the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk” (e.g. holders of car insurance may engage in riskier behaviour than non-holders, investors may take unnecessary risks if they expect to be bailed…

  • Psychology of Credit Card Minimum Instalments

    New research finds that the ‘recommended minimum instalment’ suggestions on credit card statements are more influential than previously thought: Mr. Stewart presented 413 people with mock credit-card bills of ÂŁ435.76 (about $650) that were identical — except that only half mentioned a minimum payment of ÂŁ5.42. Participants were asked how much they would pay. Among…

  • Hedge Funds: An Overview

    Like David, I’ve often been curious about the minutiae of hedge fund operations: I’ve long known the vague generalities, but never the specifics. For those in a similar situation, the London Review offers a thorough introduction to hedge funds. This was the basic strategy of the first hedge fund, as run by A.W. Jones—sociologist and financial journalist:…

  • From Evanomics to Stephanomics: The Blog of the BBC’s Economics Editor

    While Evan Davis was economics editor for the BBC he wrote the excellent Evanomics—a blog in which he attempted to “understand the real world, using the tool kit of economics”. When he temporarily stepped down from this role in March 2008 (for a yearlong sabbatical) Evanomics was sorely missed and his replacement, Stephanie Flanders, didn’t…

  • The World in 2009

    The Economist‘s annual issue collecting predictions for the coming year has been released in the form of The World in 2009. From the introduction, by editor Daniel Franklin: Anyone hoping for a period of calm after the turbulence of the past year will be disappointed. For the economy and for business, as well as for…

  • Articles to Understand the Financial Situation

    It may be a bit late now, but if you’re still looking for good information on the current macroeconomic situation the single-page compilation The Money Meltdown is an excellent resource, even given its slight U.S. slant. via Kottke (Don’t forget this previous post of excellent links, too.)