We are now a couple of weeks into the aftermath of Super Storm Sandy, and no one has
yet improved upon the analysis of
Bloomberg Businessweek’s November 1 cover story: “It’s Global Warming, STUPID.”
In 1944, the famous political economist Karl Polanyi explained the root cause of WW II
when he wrote in The Great Transformation, “The true nature of the international
(economic) system under which we were living was not realized until it failed.” Similarly,
mainstream economists and finance theorists still do not get the vital interconnection
between the true nature of the (economic) system under which we are living, and healthy
ecosystem function. What will it take?
Continue reading "Will Sandy Trigger Our Great Transformation? " »
As the year draws to a close—with most banks sewing up the loose ends of deals, and
budget and headcount numbers getting confirmed—the weeks until mid-December are an
opportune “down time” to plan your career.
If you are thinking about moving after bonus payouts in Q1, it is wise to position
yourself now and to be in touch with the right people (the overall mood is more relaxed
and festive). Here are the main groups you should network with:
Continue reading "If You Want a Post-bonus Job in 2013, Network with These Four Groups before Christmas" »
One of the most striking and important books on investing and risk management appears
something it is not. Upon first glance of The Crisis of
Crowding: Quant Copycats, Ugly Models, and the New Crash Normal (Bloomberg)
(and not being acquainted with Prof. Ludwig Chincarini’s work), I wondered how a bunch of
paper flowers on the wall was related to investing. After closer examination, I quickly
learned that these were not paper flowers, but a pile of darts all stacked together on the
dart board. At that point, I realized that Prof. Chincarini’s book would be essential
reading for me. I wanted to learn how investors would pile into—and out of—the next big
thing after the mortgage securities debacle of 2008. This informative narrative was an
investigative and methodical look into major financial crises and the demise of Wall
Continue reading "Book Review: The Crisis of Crowding" »
Said a banker: "The Crisis revealed, In
investments we carried for yield, How extreme fluctuations Affect valuations, So
better to keep them concealed."
Said investors: "It's better to trust
In the price
you could fetch if you must,
And the equity value
Which, hopefully, now
Accordingly, have to adjust."
Continue reading "No Security in Book Value" »
One of the several regulatory failures behind the global financial crisis that started in
2007 has been the regulatory focus on individual, rather than systemic, risk of financial
institutions. Focusing on systemically important assets and liabilities (SIALs) rather than
individual financial institutions, we propose a set of resolution mechanisms, which is not only
capable of inducing market discipline and mitigating moral hazard, but also capable of
addressing the associated systemic risk, for instance, due to the risk of fire sales of collateral
assets. Furthermore, because of our focus on SIALs, our proposed resolution mechanisms
would be easier to implement at the global level compared to mechanisms that operate at the
level of individual institutional forms. We, then, outline how our approach can be specialized to
the repo market and propose a repo resolution authority for reforming this market.
Continue reading "A Proposal for the Resolution of Systemically Important Assets and Liabilities: The Case of the Repo Market" »
With the Securities and Exchange Commission’s (SEC) decision on the possible
incorporation of International Financial Reporting Standards (IFRS) into the US system
still outstanding, many are wondering about the implications for their work and
Gregg L. Nelson, vice president of accounting policy and financial
reporting for IBM Corporation, shares his thoughts on this important matter. He also
explains how accounting and finance professionals might benefit from attending the 18th
Annual NYSSA International Financial Reporting Conference & Workshops from Jan. 8-10,
2013 in New York City.
Gregg is one of a number of prestigious speakers who will be
sharing their expertise at this important conference, which is presented by IASeminars and
the New York Society of Security Analysts (NYSSA). Other conference speakers
include senior representatives from the International Accounting Standards Board (IASB),
Financial Accounting Standards Board (FASB), SEC, Public Company Accounting Oversight
Board (PCAOB), etc.
Continue reading "Three Questions with Gregg L. Nelson" »
Volume Clock: Insights into the High-Frequency Paradigm"
The Journal of Portfolio Management (Fall 2012)
David Easley, Marcos M. Lopez de Prado, and Maureen O’Hara
Over the last
two centuries, technological advantages have allowed some traders to be faster than
others. In this article, the authors argue that contrary to popular perception, speed is
not the defining characteristic that sets high-frequency trading (HFT) apart. HFT is the
natural evolution of a new trading paradigm that is characterized by strategic decisions
made in a volume-clock metric. Even if the speed advantage disappears, HFT will evolve to
continue exploiting structural weaknesses of low-frequency trading (LFT). LFT
practitioners are not defenseless against HFT players, however, and this article offers
options that can help them survive and adapt to this new environment.
Continue reading "Recent Research: Highlights from November 2012" »
You’ve been invited to interview for a job. Congratulations! Take a moment to savor this small victory. No matter how well the stock market indices
have come up from their crisis lows, it’s still a challenging job in itself to find a good job on Wall Street. In this article I am going to ask that you put
aside the jobseeking mindset and concentrate on the interviewer’s perspective. We are going to examine what an interviewer needs (to feel) from you
before extending you a job offer.
Continue reading "What Do Hiring Managers Want?" »
You’ve been out of the market for over a year. How do you
present yourself to a headhunter, or for that matter, a potential employer?
Continue reading "Approaching a Recruiter after Being Out of Work for a Year" »
What are your investment beliefs?
Such a simple question—and so hard for most market participants to answer. Go
ahead, take a shot at making a list of your beliefs and see what you end up with.
Continue reading "Investment Beliefs" »