Crossing the Rubicon – III

Many years ago, more than I care to remember, I read a novel by Gabriel García Márquez called Chronicle of a Death Foretold (skip the rest of the paragraph if you do not wish to know how it ends, oh well, you are going to find out anyway). This is a story of a vengeance loudly proclaimed in a small town, where everybody knows two men are set to kill another but nobody seems to be able to tell it to the victim-to-be, who inevitably (or not, that is the whole point) gets killed.

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On EMH and CAPM

Piet Mondrian (1930), Composition II in Red, Blue and Yellow, Kunsthaus, Zurich, Switzerland.

Piet Mondrian (1930), Composition II in Red, Blue and Yellow, Kunsthaus, Zurich, Switzerland.

The financial theory put in motion to protect the fundamental investor from metaphysical efforts of chartists ended up rendering fundamental analysis useless. The professional investor being relegated to a diversification optimizer or a beta arbitrageur at best.

Crossing the Rubicon – II

While a new, apparently perpetual, monetary stimulus gives equity markets a semblance of the health they manifestly lack, Japan tries to regain the lead as the world’s most distorted capitalist economy. Bear in mind that this was a place they rightfully owned for much of the 1990s. Back when Americans scornfully though this whole idea of not letting companies sink was oh so Japanese, all those fancy ideas about samurai honour. It could never happen in the US where, of course, no company was too big to fail. Continue reading

On Religion

John Everett Millais (1851), Ophelia, Tate Britain, London, UK.

John Everett Millais (1851), Ophelia, Tate Britain, London, UK.

Environmentalism is the modern age fashionable animist religion. The belief natural objects, nature and, likely, the Universe itself, possess an immortal soul or conscience. Man’s role is to tender and prevent that frail order from being disturbed. By means of some twisted manicheism, man is also its vowed enemy. He should sacrifice is instincts, comfort, wealth and even life to that most valuable ideal. It means well but seldom passes the test of reason. It very often ends up destroying what it meant to protect.

The Presumption of a Financier

Mr. Taleb is fooled by the Sin of the Intellectual Arrogance he so much claims to despise

January 04, 2013 by Sergio Alberich

Every year, mainstream magazine “The Economist” publishes an interesting issue about the upcoming calendar year. It covers hot topics from many corners of the World, ranging from small countries to the biggest economies, from Politics to Culture, touching on Science and Technology, analyzing Businesses and Sectors and commenting on Financial matters. This special issue stays on sale for months and months, and seems like a big time entrepreneurial accomplishment.

Business wise, the Magazine is a success, surfing the new media and profiting like no other traditional publisher. Unfortunately, the understanding of the market so well mastered in its business practices is utterly ignored in the vast majority of its writings. The current issue, entitled “The World in 2013”, is no different and the words of financier Nassim N. Taleb displayed on its pages should not be ignored.

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On Money

Marinus van Reymerswaele, The Money Changer and His Wife, (1539), Museo del Prado, Madrid

Marinus van Reymerswaele, The Money Changer and His Wife, (1539), Museo del Prado, Madrid

Money is the outcome of a process of entrepreneurial discovery for solutions to the coordination problems of the division of labour: time and space mismatches between production and consumption.