Saturday, January 31, 2015

Seeking knowledge and wealth creation

I was brought up to believe that more knowledge will lead to better understanding of how the world works, which in turn would result in more wealth. Furthermore, I was led to believe that more 'difficult' knowledge, such as maths stats etc is a better form of knowledge, more empowering and hence more likely to lead to more income.

In retrospect, at least in the investment management field, unless you're in the HFT or quant fund field, more analytical knowledge is a distraction and hinders wealth accumulation. A consequence of acquiring a certain skill is that one thereafter engages in activities which utilize that skill, it's hard to just discard what one has expended effort on learning. 

Most of the time, the analytical toolbox doesn't help that much. It won't help you pick the technologies that are transformative, find the new retail offering that has connected with buyers, shed light on management error when embarking on stupid projects. It won't highlight policy possibilities, and how policy decisions will be made.

In the end, for all the numbers and data flitting across our screens, this isn't data mining of natural phenomena, such as lumens of stars etc. It's just humans, ruled by greed and fear. Sometimes mustering the courage to buy something, other times scared that they must sell. If you are honest to what drives the data flow and you respect the underlying forces, you will prosper.

Sunday, January 18, 2015

On the SNB move yesterday

Brief Comment:
Always remember, investment management is the game of equilibrium and disequilibrium.
If an FX rate is destined to go somewhere, it will eventually get there, despite any policy wishes.
Policymaker wherewithal also has limits.


Links:

http://acrossthecurve.com/?p=19281
http://www.businessweek.com/articles/2015-01-15/heres-what-the-swiss-central-bank-just-did-and-why-its-such-a-shocker
http://www.bloomberg.com/news/2015-01-15/mayhem-erupts-on-trading-floors-after-snb-s-currency-shocker-.html
http://www.bloomberg.com/news/2015-01-15/franc-s-surge-ranks-among-largest-ever-in-foreign-exchange.html
http://www.bloomberg.com/news/2015-01-15/mild-mannered-jordan-hands-markets-seismic-surprise-in-cap-exit.html

WSJ

http://blogs.wsj.com/economics/2015/01/16/grand-central-swiss-franc-fallout-exposes-crack-in-post-crisis-regulatory-reforms/
http://www.wsj.com/articles/switzerland-scraps-currency-cap-1421320531
http://blogs.wsj.com/moneybeat/2015/01/15/on-switzerland-the-floor-and-losing-faith-in-central-banks/
http://www.wsj.com/articles/snb-shocks-bankers-and-markets-1421342951
http://blogs.wsj.com/economics/2015/01/15/10-takeaways-from-lagardes-swipe-at-the-swiss-national-bank/
http://blogs.wsj.com/moneybeat/2015/01/15/swiss-move-shows-central-bank-cant-operate-in-isolation/
http://www.wsj.com/articles/swiss-shock-tarnishes-central-banks-heard-on-the-street-1421341862
http://www.wsj.com/articles/swiss-franc-move-cripples-currency-brokers-1421371654
http://blogs.wsj.com/moneybeat/2015/01/16/a-franc-question-what-was-the-snb-thinking/
http://www.wsj.com/articles/after-defending-cap-central-bank-chief-scraps-it-1421380750
http://blogs.wsj.com/moneybeat/2015/01/16/why-swiss-bank-mortgage-pain-could-still-hurt-eastern-neighbors/


Tuesday, January 13, 2015

The 1986 Oil Glut

Just putting some links here (to be continuously updated) on the 1986 oil glut:

Bloomberg: Oil Collapse of 1986 Shows Rebound Could Be Years Away

Brookings - Lessons from the 1986 Oil Price Collapse

http://en.wikipedia.org/wiki/1986_world_oil_market_chronology

http://en.wikipedia.org/wiki/1980s_oil_glut

http://blogs.platts.com/2015/02/06/lesson-from-oil-history/

non-1986 Oil stories
http://blogs.platts.com/2015/02/10/oil-prices-push-towards-60/
http://blogs.platts.com/2015/02/10/opec-strategy-iea/
http://blogs.platts.com/2015/02/05/oil-big-five-feb15/