The Bursting Of The Volatility Bubble: Part 1
If there were a Word of the Year award in finance it most certainly would go to volatility. It seems like nearly every article you read makes some reference to it. Is volatility gone for good or is it just in hibernation? Did central bankers forever squash volatility, repress volatility for some time, transform volatility? Did structural changes in the macroeconomic landscape create a “new normal” with respect to volatility? Is volatility building beneath the surface of the markets planning its vengeful return? Is volatility volatile? Volatility, volatility, volatility! With all this discussion of volatility, one thing seems certain: there’s a bubble in volatility, as in the word itself.
- 18/12/2018
- 4
Reminiscing On Reminiscences Of A Stock Operator
I recently finished reading Edwin Lefèvre’s classic Reminiscences of a Stock Operator, marking my second time through the book. I first picked it up nine years ago on the recommendation of a former coworker who was a flow trader. A burgeoning credit analyst at a bulge bracket investment bank at the time, I was interested in learning more about the trading aspect of job and had asked for a primer on the subject. While initially confused to have received the historical novel as the answer to my inquiry, my sophomoric skepticism was completely reversed by its end. Though many of the book’s lessons were largely lost upon my younger self, it struck the older, wiser, and only slightly more profitable “me” like a thunderbolt. In this post I thought I’d do some reminiscing on Lefèvre’s “Reminiscences”, and add to the ever expanding tome on the subject.
- 17/12/2018
- 8
Passive & Private Market Force, Ecology & Evolution
Central bankers catch a lot of flak these days. To be sure, much of it is deserved in my opinion. However, there are two dominant trends in the market place – increasing allocations towards passive and private market investment strategies – where this ire might be misplaced. What if these developments, however undesirable they may or may not be, were merely part of the “natural” evolution of investment markets?
- 15/12/2018
- 5
Value Investing: Is Life Imitating Art?
Life imitates art far more than art imitates life.
- 11/12/2018
- 4
An Investment Philosophy: Who Needs It
Despite the opulent or debauched images one might have about the investment industry (depending on one’s perspective), the fact is that investing is a highly intellectual pursuit. I don’t mean this in the colloquial sense where one ruminates on meaningless abstract ideas purely for contemplation’s sake. Rather, it is an immensely cognitive and productive activity. Successful investing doesn’t require exceptional physical conditioning, brawn, salesmanship, “people skills”, mathematical aptitude, or a high IQ. It entails (I think) developing some kind of mental model for how the world works. Not only must this model display some degree of accuracy (i.e. be a good one), but one must maintain conviction in his/her model and have the integrity to stick to it through thick and thin. Said differently, one needs a well-defined investment philosophy.
- 06/12/2018
- 4
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