LATEST BLOGS

Sensation Seeking and Hedge Funds

ABSTRACT We show that motivated by sensation seeking, hedge fund managers who own powerful sports cars take on more investment risk but do not deliver higher returns, resulting in lower Sharpe ratios, information ratios, and alphas. Moreover, sensation‐seeking managers trade more frequently, actively, and unconventionally, and prefer lottery‐like stocks. We show further that some investors…

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More Stuff About Returns

I seem to be spending a fair bit of time talking about returns either via email, PM or via the blog. The most common question I get seems to revolve around the simple idea of what can I expect and is X figure realistic. This figure is generally a number that is wholly unrealistic in…

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Monday Is Bin Day

Monday morning is bin morning in my suburb so on Sunday evening everyone in my street collects their gaggle of variously coloured bins and parks them on the nature strip ready for collection. This morning I get and open the curtains and spy a tradies ute parked right in front of the bins thereby making…

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There Is No Magic

LB and I have just wrapped up the final in our series on full time trading. For the most part they have been enjoyable except for one twat who complained that it was unprofessional of LB to not present when she was suffering from severe laryngitis. Presenting for the first time in years is an…

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Its The End Of The World As We Know It

Bored with the usual headline of the looming war with China, North Korea, Russia and the Packenham Upper Under 12B’s the Murdoch press has now turned its hyperbolic panic based radar onto the housing market. Apparently that house you bought last year for $3M is now worth one ugly camel, a distributor from a Datsun…

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Really

I saw this piece over someones shoulder whilst having lunch yesterday and I thought I must have misread it. You know those times when something flashes into your view and you make a snap judgement about what it was and your initial guess seems stupid and is proved to be so upon revision, It does…

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Happy Anniversary

We are approaching the ten year anniversary of the implosion of Lehman Brothers and the subsequent meltdown in the financial system that precipitated the GFC. As always it is instructive to look back in history and see what lessons can be learned. Although I will offer a spoiler – there is nothing new to be…

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Fun With Coin Tossing

It may sound weird but I really like playing with software that simulates distributions – it probably comes from when I had a semester free at Uni and simply took subjects that looked interesting. One of the ones I dropped into was Mathematical Ecology which is largely the mathematics of  natural distributions. I found it…

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How To Upset People

You would have thought that someone like me would have already explored all the ways in which you can upset people but over the past few days I have managed to discover two more. Tell people they are living the life they have created. This is simply a variation on the old theme of you…

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How to Make a Big Decision

In July 1838, Charles Darwin, then 29, sat down to make a decision that would alter the course of his life. The decision he was wrestling with was not related to scientific questions about the origins of species. It was a different kind of decision — existential as well, but of a more personal nature:…

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