The Hidden Asset

By |2017-02-02T11:26:38+00:00February 1st, 2017|Categories: Global Market Update|Tags: , , |

What’s the asset that no one talks about? Photo: Bryan Hanson. Source: Morguefile When I discuss asset allocation, I usually focus on stocks and bonds. Bonds are a senior claim on a business’s cash flow, and stocks are a residual claim on cash flow. So stocks benefit from a business’s growth, but they’re riskier – they get wiped out if the business fails. Bonds are safer, but they don’t go anywhere. If everything goes right, you just [...]

Mountains and Markets

By |2015-04-20T08:41:31+00:00April 20th, 2015|Categories: Global Market Update|Tags: , , |

Tuckerman Ravine Image Source: Douglas Tengdin How much attention should we pay to forecasts? I recently hiked into the mountains for some spring skiing. The forecast wasn’t great: cloudy with showers, then partial clearing, with a front moving in the next day. When we arrived at the trail, expectations had deteriorated—the following day was supposed to bring worse weather—snow, sleet, and freezing rain. But there was a lot of snow right then, and we were prepared. If [...]

Beating the House

By |2015-01-22T10:16:01+00:00January 22nd, 2015|Categories: Global Market Update|Tags: , , |

Is investing like gambling? Photo: Casinocashjourney.com I’ve written before how investing isn’t gambling. Gambling is a zero-sum game, while investing makes everyone better off. Gambling is entertainment, while investing is a fundamental part of business. Investors own something real—a share of a company, or a loan to a city; gamblers don’t own anything. They just participate in a process. […]

Reviewing Risk and Return

By |2016-11-17T16:32:41+00:00December 8th, 2014|Categories: Global Market Update, UI Journal|Tags: , , |

What’s your tolerance for risk? Some people see risk and see only danger: lions and tigers and bears, oh my! Others look at risk as an opportunity for an adrenaline-rush: backflips off cliffs into mountain lakes, bungee-jumping off bridges and buildings. Risk is an integral part of finance. Different asset classes have different levels of uncertainty regarding their underlying cash-flow. This uncertainty translates into a risk-profile. […]

Reaching the Top (Part 2)

By |2016-11-17T16:43:52+00:00March 26th, 2014|Categories: Global Market Update|Tags: , , |

“Getting to the top is optional. Getting down is mandatory” That’s the formula Ed Viesturs developed as he pursued his quest to climb all 14 of the world’s 8,000 meter peaks. When he accomplished this in 2005 he was only the 12th person ever to do so. Since then only 19 others have climbed all 14. On a mountain, Ed describes himself as a risk-manager, continually evaluating whether the conditions or circumstances support the next move.Similarly, risk management [...]

Reaching the Top (Part 1)

By |2014-03-25T09:59:28+00:00March 25th, 2014|Categories: Global Market Update|Tags: , , |

Is investing like climbing mountains?I thought about this when I looked at the career of Ed Viesturs, the first American to climb all 14 of the world’s 8000-meter peaks—all without supplemental oxygen. He has sometimes been called a risk-taker, but he bridles at that description. He defines himself as more of a risk manager, continually assessing the conditions and deciding whether to go forward to not.Because the air is so thin and conditions are so extreme where [...]

Moving Mountains (Part 4)

By |2013-05-20T09:07:28+00:00May 20th, 2013|Categories: Global Market Update|Tags: , |

In spite of all you do, stuff happens.In spite of all your preparation, all your planning, all your experience, mountains and markets can and will surprise you. Mountains are chaotic systems: they disrupt the airflow around them, and so they can create extreme situations, where the turbulent winds and a lack of cover transform a beautiful clear day into a massive maelstrom where there’s no shelter. […]

Moving Mountains (Part 1)

By |2016-11-17T16:58:40+00:00May 15th, 2013|Categories: Global Market Update|Tags: , , |

How does respect fit into risk management?When you’re in the mountains, the first thing you learn is respect for the mountain. No one ever “conquers” a peak. Hillary didn’t “conquer” Everest; Whymper didn’t “conquer” the Matterhorn. The men and women who made first ascents did something unprecedented, but the mountains are still there. […]