Looking for Risk in All the Wrong Places

By |2017-11-16T15:00:42-04:00November 15th, 2017|Categories: Global Market Update|Tags: , , , |

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 [...]

Seeking Safety

By |2017-07-13T11:37:21-04:00July 13th, 2017|Categories: Global Market Update|Tags: , , |

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 [...]

French Lessons

By |2017-03-02T10:52:13-04:00March 1st, 2017|Categories: Global Market Update|Tags: , , , |

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 [...]

Re-Thinking Brexit

By |2016-11-17T15:40:42-04:00October 6th, 2016|Categories: Global Market Update|Tags: , , , |

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 [...]

On Tips and Tipping (Part 2)

By |2016-11-17T15:45:19-04:00July 21st, 2016|Categories: Global Market Update|Tags: , , |

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 [...]

Certain About Uncertainty

By |2016-11-17T15:51:46-04:00May 6th, 2016|Categories: Global Market Update|Tags: , , , |

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 [...]

Rolling the Dice

By |2016-11-17T15:55:02-04:00March 24th, 2016|Categories: Global Market Update|Tags: , , , |

“Don’t bother me with the odds.” Photo: Dodgerton Skillhause. Source: Morguefile That’s what a lot of gamblers think as they roll the dice. It’s not probabilities and decisions trees that they’re considering -- it’s the adrenaline rush of maybe winning, maybe losing, that has them excited. It can be exhilarating, but it’s pretty reckless when it comes to your money. There are a lot of times where we can’t calculate the odds—situations that are impossible to predict [...]

Known Unknowns

By |2016-11-17T16:08:23-04:00September 29th, 2015|Categories: Global Market Update|Tags: , , |

“I know something you don’t know.” © MGM 1987. Source: IMDB In The Princess Bride one of the characters smiles during an epic sword fight as he is forced back, step-by-step, towards the edge of a cliff. When his assailant asks why, he says that he knows something the other doesn’t: he’s not left-handed. As he changes hands, the tide of the fight turns. As the market struggles with fears of a Chinese economic slowdown, concerns about [...]

Of Risk and Return (Part 2)

By |2016-11-17T16:11:25-04:00August 19th, 2015|Categories: Global Market Update|Tags: , , , |

How do we manage risk? Photo: Dodgerton Skillhause. Source: Morguefile The first step is to acknowledge that it’s there, and it’s not our friend. Unworried investors are their own worst enemies. The Financial Crisis came about mainly because investors thought they were living in a low-risk world. They purchased novel and complex instruments in greater amounts than ever before. They borrowed money to buy them, which multiplied losses when they had to sell. Leverage works both ways. [...]

Han Solo Investing?

By |2016-11-17T16:21:05-04:00April 24th, 2015|Categories: Global Market Update|Tags: , , , |

Image Source: Wikipedia “Never tell me the odds!” That’s what Han Solo yells at C3PO as his ship flies into an asteroid field in “The Empire Strikes Back.” With Han Solo returning in the new Star Wars movie, a lot of these old movie lines are coming back. Han Solo doesn’t want to know the odds of success because that information might crimp his swashbuckling style—which is pretty reckless. It makes for an entertaining movie, but it [...]