I don’t want to take full credit for coining the term “Magoo Finance”, because others have already attached the name to the person of former Fed Chairman Alan Greenspan well before I did (see earlier). But I wonder if it might now serve as a useful shorthand for my colleagues in Big Media to characterise the kind of blind or short-sighted risk-taking that has been a feature of the past several years.

I thought it was noteworthy that the expression Value at Risk yields no useful information when punched into the BBC news archive, The [London] Times, or Daily Telegraph. The Guardian, Independent and New York Times all make mention of it, but in no systematic way, normally simply in relation to bank earnings. (The NYT yields a review of Taleb’s second book Fooled by Randomness, that is less than complementary.)

VaR is used by the banks to determine how much the bank would lose in a given day on its assets under management given a certain fall in the markets. Banks use it to calibrate their risk management. It is a pillar of the modern banking regulatory regime. Continue reading ‘magoo finance III’

As pointless exercises go, collecting a copy of the latest Harry Potter at midnight Friday/Saturday comes fairly close. Because this is the last book expected in the series, and because the oldest Chip off the Old Hack was able to keep himself awake this time, I relented and we traipsed into town amid the latest Friday convention of Bath binge-drinkers to join the thronging hundreds in wizard costumes queuing up outside the two chosen bookshops.

There was clearly a Pareto 80/20 distribution going on, with Waterstone’s bagging the lion’s share of buyers in exchange for some form of goodie bag (or so I heard), while the smart money (KH and COTOH included), who did not want to stay up all night, chose the more down-at-heal WH Smith’s outlet, where a more straightforward and expeditious exchange of money-for-book took place. It was not really a party atmosphere, more like some tired observance of a ritual whose original import has been forgotten. The only spectacle was that of the muggle bingers taunting the Potterholics. Continue reading ‘harry potter and the messed-up circadian rhythms’