Investors Pay for Hedge-Fund Illusions

In an earlier article for Bloomberg View, I described a danger facing investors: the put-option illusion. This is when investors, who tend to extrapolate too much from recent trends, are fooled into thinking that a string of good returns means an investment has very little risk. Often the risk is just lurking way out in the tail…

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Short Selling

The table below grabbed my attention this morning, it from the investment research group Bespoke who produce all manner of statistics on the market. Most of which I neither understand nor use.   What the table basically says is that the short sold stocks have outperformed the market on the upside – that is short…

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Woman Wins First Fields Medal

The Fields Medal for mathematics is the equivalent of the Nobel Prize and is awarded to mathematicians under 40. The prizes this year contained a young female mathematician whose work on abstract surfaces is beyond me. This raises the blunt question of why the fuck has it taken so long to give the prize to…

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Things I Am Reading

These are a few of things that have been on my reading list lately. The Return How Gamblers Get Hot If You Cant Choose Wisely, Pick At Random Practice Not As Important As Thought What’s the Point If We Can’t Have Fun? Why Smart People Are Stupid

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Information And Inadequacy

I have snipped the two quotes from the always interesting Lefsetz Letter which is ostensibly about the music industry but is actually about so much more. INFORMATION OVERLOAD The twentieth century was all about scarcity, making it to the top and then dominating. Today there’s so much information that you feel inadequate. It’s an endless buffet…

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I thought I might take a bit of a longer look at the events of last week and see what they might mean; if anything. One of the interesting things about markets is the presence of perma- bears – that is traders/pundits/general idiots who no matter what the market condition are constantly calling for the…

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AIA Conference

I have just returned from the AIA Conference – the old buggers put on a reasonably good show. Although, it is one of those events that without the energy of the coordinator Donna Meadows I don’t think it would fly nearly as well. The theme of the conference was Outcome Oriented Strategies for individuals Investors.…

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Stop Worrying About the Next Market Crash

How should you act in the face of such unpredictability? First, don’t listen to doomsayers who are convinced financial calamities are imminent. They don’t know. (This is a powerful piece of advice that is seldom adhered to if my recent trip to the AIA Conference is anything to go by) Second, since avalanches are infrequent,…

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Hedge Funds Run By Women

This tallies with work down by Brad Barber and Terrance Odean on the relative returns of male and female investors, But the benefits of investing in female-led financial endeavors go even further than the Journal has it: Hedge funds run by women tend to outperform other hedge funds. A report put out in early 2013…

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Gold Versus Shares…..Who Cares?

Recently on the Google box there has been a debate as to whether gold is either a better investment than equities or  is in fact actually a hedge against inflation. This debate is interesting because of some of the logical fallacies both sides make in trying to justify their arguments. If you ask the simple…

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Dow Jones

It looks as if at least for the interim the fun might be over – as you would expect I was booted out of my long Dow positions overnight.   As can be seen from the above chart pullbacks in extended trends are the norm and the psychology of markets is such that they can…

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