I wish our economy could be illustrated in a simple mathematical model where the increase in GDP would be a linear and precise function of the increase in something else under our control. I wish the central bank could print money for us to keep our spending habits without having to work. I wish Paul…
As featured in this month’s Master Investor Magazine. “We like to create value rather than merely identify it…if we just identify value, we can’t make money unless the market moves the security in the predicted direction.” ― Paul Singer A Non-consensual Man This month’s hedge fund manager in focus has some peculiar characteristics that make…
As featured in this month’s Master Investor Magazine. “To reduce risk it is necessary to avoid a portfolio whose securities are all highly correlated with each other. One hundred securities whose returns rise and fall in near unison afford little protection than the uncertain return of a single security.” – Harry Markowitz, 1968 Early Days…
We live in strange times in terms of economic reasoning and thinking. One Nobel laureate economist believes that saving is public enemy number one, as it prevents economies from growing, hence he preaches the virtues of macro policies aimed at leading people to spend whatever they produce, and eventually a little extra if they can…
Unlike the foreign exchange markets, where traders expect their bets to move vividly when the Fed puts an extra comma on its policy statement; unlike the equity markets, where traders expect price panic when Merkel sneezes; unlike commodities markets, where traders expect Armageddon when rainfall increases by one drop per year; in the gold market,…
After a roller coaster weekend in EU politics, financial markets opened Monday with increased volatility but in certain ways disregarded the political and economic implications of what happened during the weekend. The Greeks said “no” to a new bailout, Yanis Varoufakis was dismissed, the dra(ch)ma is back on the table; but still investors don’t seem…
Following the Leader It is always entertaining to listen to European officials speaking in a placid tone as if everything were under control. Greece is on the brink of leaving the Euro; austerity policies have wrecked a few peripheral economies; debt levels are higher than before the financial crisis; and output growth is languishing. But…
Painkillers can help you dull the pain when recovering from an unhealthy condition to a healthy one. But when you use too much of them for a prolonged time, increasing the daily dose to unsafe levels until they miraculous cure your unhealthy condition, you may end up killing something (but not the pain). The same…
“I think our support for the EEC has been very half-hearted. You really cannot join any group of nations and spend all your time criticising it. The EEC is free Europe getting together. Had we had some vision like that after the First World War, we might never had the Second. My son does not…
Central banks have a long track record of failure when it comes to stabilising the price of money. Many decades after their creation and they still know very little about the full consequences of their actions. But one can’t blame them, because there are so many variables in the process that aren’t under their control…
