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Archive for the ‘Finance’ Category


 

Billionaire investor, industrialist and philanthropist, Warren Edward Buffett, and his thoughts on:

Vox populi

A public-opinion poll is no substitute for thought.

Overthinking

Beware of geeks bearing formulas.

Derivatives

Derivatives are financial weapons of mass destruction.

Suits

I buy expensive suits. They just look cheap on me.

Market Relativity

In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

Wall Street is the only place that people ride to in a Rolls Royce to get advice from those who take the subway.

Fear and Uncertainty

You know, people talk about this being an uncertain time. You know, all time is uncertain. I mean, it was uncertain back in – in 2007, we just didn’t know it was uncertain. It was – uncertain on September 10th, 2001. It was uncertain on October 18th, 1987, you just didn’t know it.

Americans are in a cycle of fear which leads to people not wanting to spend and not wanting to make investments, and that leads to more fear. We’ll break out of it. It takes time.

Media

The smarter the journalists are, the better off society is. For to a degree, people read the press to inform themselves-and the better the teacher, the better the student body.

Wealth

I always knew I was going to be rich. I don’t think I ever doubted it for a minute.

Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.

Hindsight

If past history was all there was to the game, the richest people would be librarians.

Risk

Risk comes from not knowing what you’re doing.

Risk is a part of God’s game, alike for men and nations.

Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.

Taxes

If anything, taxes for the lower and middle class and maybe even the upper middle class should even probably be cut further. But I think that people at the high end – people like myself – should be paying a lot more in taxes. We have it better than we’ve ever had it.

Investors

We believe that according the name ‘investors’ to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a ‘romantic.’

Contrarian Thinking

We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

Bad business

When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact.

Diversification

Wide diversification is only required when investors do not understand what they are doing.

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Billionaire financier, businessman, philanthropist, and advocate of liberal idealism, Gyorgy Schwartz, more popularly known as George Soros, and his thoughts on:

Open Societies

A full and fair discussion is essential to democracy.

An open society is a society which allows its members the greatest possible degree of freedom in pursuing their interests compatible with the interests of others.

I chose America as my home because I value freedom and democracy, civil liberties and an open society.

Markets and Social Needs

I think there’s a lot of merit in an international economy and global markets, but they’re not sufficient because markets don’t look after social needs.

Markets are designed to allow individuals to look after their private needs and to pursue profit. It’s really a great invention and I wouldn’t under-estimate the value of that, but they’re not designed to take care of social needs.

Markets and Uncertainty

Stock market bubbles don’t grow out of thin air. They have a solid basis in reality, but reality as distorted by a misconception.

Markets are constantly in a state of uncertainty and flux and money is make by discounting the obvious and betting on the unexpected.

Philanthropy

I’m not doing my philanthropic work, out of any kind of guilt, or any need to create good public relations. I’m doing it because I can afford to do it, and I believe in it.

War on Terror

Bush’s war in Iraq has done untold damage to the United States. It has impaired our military power and undermined the morale of our armed forces. Our troops were trained to project overwhelming power. They were not trained for occupation duties.

Marijuana

Just as the process of repealing national alcohol prohibition began with individual states repealing their own prohibition laws, so individual states must now take the initiative with respect to repealing marijuana prohibition laws.

Who most benefits from keeping marijuana illegal? The greatest beneficiaries are the major criminal organizations in Mexico and elsewhere that earn billions of dollars annually from this illicit trade – and who would rapidly lose their competitive advantage if marijuana were a legal commodity.

The criminalization of marijuana did not prevent marijuana from becoming the most widely used illegal substance in the United States and many other countries. But it did result in extensive costs and negative consequences.

Testing

The financial markets generally are unpredictable. So that one has to have different scenarios… The idea that you can actually predict what’s going to happen contradicts my way of looking at the market.

Fallibility

Once we realize that imperfect understanding is the human condition there is no shame in being wrong, only in failing to correct our mistakes.

The people currently in charge have forgotten the first principle of an open society, namely that we may be wrong and that there has to be free discussion. That it’s possible to be opposed to the policies without being unpatriotic.

Contrarian Thinking

The worse a situation becomes the less it takes to turn it around, the bigger the upside.

The United States

We are the most powerful nation on earth. No external power, no terrorist organization, can defeat us. But we can defeat ourselves by getting caught in a quagmire.

We must recognize that as the dominant power in the world we have a special responsibility. In addition to protecting our national interests, we must take the leadership in protecting the common interests of humanity.

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We reopen our blog posts today by taking AskMen.com‘s advice on the 10 Top TED Talks. We’ve featured TED Talks here before and this Top 10 list is fresh and very insightful material.

From AskMen.com:

The Technology, Entertainment and Design (TED) conferences aim to help foster a better future by mining the ideas of “the world’s smartest thinkers, greatest visionaries and most-inspiring teachers.” Past TED talks have been given by Gordon Brown, Bill Gates, Steve Jobs, and other preeminent figures in their fields. Since 2007, hundreds of talks have been available online in their entirety on subjects ranging from matters of dire global importance to lighthearted comedy.

Described in The New York Times Magazine as a series of “head-rush disquisitions” from “violinists, political prisoners, brain scientists, novelists, and Bill Clinton,” the event isn’t at all limited in its scope, as long as the final product is interesting. The talks to follow are all in some way about men’s issues, though they range from perilous adventure to reflective poetry.

(more…)

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Hungry Investors

Ever invest on an empty stomach?

From Freakonomics:

Does hunger affect risk aversion? A new study, written up on the British Psychological Society blog, says it does. Researchers had 19 males play a gambling game after a long fast; immediately after a 2,000-calorie meal; and one hour after the meal. The immediate effect of the meal was neutralizing: the more risk-averse men were less cautious when playing immediately after eating, and the opposite was true for less risk-averse men. An hour after eating, men who felt less hungry played more cautiously. “This parallels findings in foraging animals,” said Mkael Symmonds, one of the study’s authors, “where changes in metabolic state promote changes in behavior to maintain or reach a metabolic benchmark (to take more risk if intake rate is relatively low, and less risk if intake is relatively high), but here we see the effect in the economic domain.” The researchers point out that their findings may have implications for the obese, dieters, and people with eating disorders. (And, of course, traders.)

“Sent from my BlackBerry® wireless handheld”

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Presidential Pay vs. GDP

Good chart from The Economist, showing comparatively country leaders’ salaries across the world as a percentage of their country’s average per capita GDP.

ON MONDAY July 5th Raila Odinga, Kenya’s prime minister, rejected the pay increase he was awarded by the country’s parliament last week. MPs had granted Mr Odinga a rise to nearly $430,000 a year, while giving themselves a 25% increase to $161,000. This boost would place Mr Odinga among the highest-paid political leaders in the world. More worryingly, his salary would be some 240 times greater than the country’s GDP per person (measured on a purchasing-power parity basis). Lee Hsien Loong, the prime minister of Singapore, tops our list of selected leaders’ salaries. He is paid more than 40 times the city-state’s GDP per person. At the other end of the scale, Manmohan Singh, the prime minister of India, reaffirms his reputation for saintliness by taking a modest sum from Indian taxpayers.

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Question is: is it pay for performance?
“Sent from my BlackBerry® wireless handheld”

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Kedrosky today on risk-aversion between Catholics and Protestants:

We examine the relations between mutual fund risk-taking behaviors and local religious beliefs. We find that funds located in regions with lower Protestant population or higher Catholic population tend to have higher volatilities of fund returns, consistent with Protestants (Catholics) being more (less) risk-averse compared to general population.

More here.

“Sent from my BlackBerry® wireless handheld”

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Good piece on Seeking Alpha about market correlations: these days individual fundamentals don’t seem to matter as much as general market trends:

We used to be a market influenced by lemmings, but now they run the market. Remember two weeks ago? Every asset up… get out of the way. Risk is ON! Five weeks ago? You own stuff? Loser! Risk is OFF! 12 weeks ago? Everything must go up! Last week? Sell sell sell… everything!

The measured correlation of markets is around 80%, which indicates investing is more a game of follow the leader than picking opportunities.

Read on here.

And for anecdotal proof, here’s how the price of crude oil is correlated with other commodities: like alcohol:

LONDON (Reuters) – Britain’s financial regulator has fined and banned a former broker for manipulating oil prices by buying more than 7 million barrels while on a drinking binge.

The Financial Services Authority (FSA) said it fined Steven Perkins, a former employee of PVM Oil Futures Ltd, 72,000 pounds ($108,000) and banned him from working in financial services for at least five years for carrying out trades without the authority of clients or his employer.

Perkins’ unauthorized trading pushed the price of Brent crude oil futures up to almost $73.50 a barrel — at that point the highest level prices had hit on the InterContinental Exchange in 2009.

The rest of the insanity here.

It’s an absurd game we play.

“Sent from my BlackBerry® wireless handheld”

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