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    Today's Post

    The Illusion of Conscious Investing Decisions Consciousness did evolve. Why? I submit that there is no good answer to this question unless consciousness makes a difference to behavior. Trading and investing must be included as "behaviors" in that generalization.

    What happens when I decide to press a red button? Suppose I’m a volunteer for a laboratory experiment. The experimental apparatus is very simple: I have a red button and a blue button on a table in front of me. Pressing one has a predictably different outcome from pressing the other. I’ve been briefed on the outcomes (perhaps the red button means I get $5 today and the blue one means I get $7 tomorrow – though the specifics of the outcomes don’t matter right now.) So I’m told: go ahead. Make a choice. Press a button. Oh, one other thing: wires are attached to my brain. These wires can tell when my central nervous system has made the decision for the red button or for the blue button. There is a scientist standing behind me looking at a screen that shows him a reading from those wires. Now: so far as I know I just invented that hypothetical experiment. There have been a number of real-world experiments that have borne some resemblance to ...

Featured Post

12-10-13 © Vadven
Ukraine Falling to Economic Warfare and Its Own Missteps

As violence overtakes Ukraine in the east and Russian soldiers amass on the borders, it might be time to take a serious look at what Moscow's stated grievances are and why Ukraine's new leaders need to look east for unity and how they missed the boat on energy.

By Robert Bensh, Oilprice.com As protests in Ukraine’s eastern region turned violent on Sunday leading to the death of a Ukrainian security officer in a shootout with pro-Russian militia, Kiev threatens military action while Moscow flexes its geo-economic warfare muscles. Pro-Russian militia groups have seized government buildings and police headquarters in Ukraine’s eastern city of Donetsk and Slovyanks--where the shoot-out took place--and despite a Monday morning ultimatum by the Ukrainian government, these groups have shown no sign of giving in. There has been ...

04-29-13 © PeJo29
U.S. Gas Prices Rise, but not because of Global Factors

Daniel J. Graeber, Oilprice.com, on the rising pricing at the pump in the U.S.

By Daniel J. Graeber Global energy markets are jostling between the return of Libyan crude oil and lingering tensions over Ukraine. It's domestic supply and demand issues, however, that are weighing on U.S. gasoline prices, AAA said Monday. Prices waxed and then waned amid dueling overseas developments. Last week, Russian President Vladimir Putin warned European energy security was at risk because of Kiev's debt obligations. The state-run oil firm in Libya, however, said the port of Zawiya and associated oil infrastructure were ...

Guest Posts

Skorina
The Skorina Report: PIMCO’s Heir-apparent goes missing
Charles Skorina looks at the implications of El-Erian "disappearing" from PIMCO.

By Charles Skorina The noisiest recent CIO turnover was at a sell-side firm, but one which is closely watched by many institutions.  PIMCO's CEO and Co-CIO Mohamed El-Erian has been replaced -- or at least succeeded by -- a whole roomful of folks.  El-Erian, who reportedly earned $100 million in 2011, announced his departure in January and was gone by March 1.  He has no job in prospect except a part-time gig as a consultant to PIMCO's German parent Allianz SE. Douglas ...


Performance, Analytics & Metrics

Beware the Hedge Fund Indices of March, Caesar
Japan-focused funds had three consecutive months of negative returns this quarter. These numbers look particularly jarring in contrast to the 2013 returns, from back in the days when Abenomics was being hailed as a success.

caesar

Hedge fund managers don’t have the precognitive powers of ancient Roman soothsayers. They must rely, instead, on the old trick of looking for patterns in the past and present, and hoping they interpret them properly. But, as it happens, that famous soothsayer’s warning in March of 44 BC didn’t do Julius any good either so perhaps the absence of soothsaying does us of the 21st century no real harm. In our era, the independent data provider Eurekahedge has just issued its latest report on the state of the world’s hedge fund industry, ...

Institutional Investing

The Skorina Report: PIMCO’s Heir-apparent goes missing
Charles Skorina looks at the implications of El-Erian "disappearing" from PIMCO.

Skorina

By Charles Skorina The noisiest recent CIO turnover was at a sell-side firm, but one which is closely watched by many institutions.  PIMCO's CEO and Co-CIO Mohamed El-Erian has been replaced -- or at least succeeded by -- a whole roomful of folks.  El-Erian, who reportedly earned $100 million in 2011, announced his departure in January and was gone by March 1.  He has no job in prospect except a part-time gig as a consultant to PIMCO's German parent Allianz SE. Douglas Hodge (a non-portfolio manager) will be the new CEO.  And ...

Media Coverage of Hedge Funds

Thoughts on Lewis and Flash Boys
Michael Lewis portrays Aleynikov, the Russian born coder convicted of two counts of theft in 2010 and imprisoned, then released by decision of an appeals court two years later, as a central figure in this dramatic tale about high-frequency trading. Aleynikov is not one of the bad guys, as such: but he is a self-blinkered tool of the bad guys. Some sympathy is extended: not much.

lewis

Ginger Szala reviewed Michael Lewis’ book, Flash Boys, for readers of this blog. If you haven’t read that review, please do so.  I’d like to continue the discussion here, building on rather than repeating her points. Lewis has certainly done his research. Much of the material about Sergei Aleynikov, for example, was new to me, though I have written of Aleynikov’s recent travails myself. Lewis, here as in his other books (even when writing about baseball or football) likes to tell dramatic stories with good guys and bad guys. It is part ...

Book review

Unintended consequences: a not-so random walk down Wall Street
Guest columnist Ginger Szala on Michael Lewis' new book.

flashboys

By Ginger Szala Flash Boys A Wall Street Revolt By Michael Lewis 334 pages W.W. Norton & Co. No matter which side you’re on in the hyperbolic debate on high frequency traders that Flash Boys has caused, or even if you aren’t on a side, read this book. As with all Michael Lewis’ work, it’s a great read and gives a front row seat to the inner workings of Wall Street, a different take on its players and uncovers the sickness of today’s stock market. As is typical of Lewis’ narratives, he gets into the characters that ...

Hedge Fund Strategies

What a Hedge Fund Failure Looks Like

07-15-09 © creisinger

By Jeff Malec, CAIA CEO, Founding Partner Attain Capital Management, LLC The Twittersphere couldn’t get enough of the news last week that hedge fund legend Paul Tudor Jones was shutting down one of his eponymous funds, the Tudor Tensor Fund (try saying Tudor Tensor 10 times fast). And critics of hedge funds will jump to the conclusion that it’s a dangerous world out there among alternative investments, and investors need to be careful because even a legend like ...

Academic Research

Science, Scientism and Economics: Some Timely Thoughts
If you wish, you can take the idea that humans are purposive as a very broad empirical generalization. Or you can take it in various other ways. What matters is that it certainly isn’t as specific or historical as the kind of fact-gathering that the historicists of yore had in mind. And that continues to serve as a sore point in discussions within and about Austrian economics.

MRothbard

There’s been a dust-up in a certain corner of cyberspace recently about an arcane-sounding subject, the epistemology behind Austrian economics. The term “Austrian” has lost its geographical specificity in recent decades, and has become a factional tag in economics. It refers to certain theories and, even more, to a certain style in the presentation of theories. For example, Austrians see macroeconomics as derived from microeconomics (when it isn’t simply wrong), and they see microeconomics as very ...

Technology

IP Rights in Software: From Settlement Risk to Data Compression
The patent dispute at issue before the Supreme Court March 31st involved a computerized escrow system that serves as a third party to a deal, eliminating settlement risk. A business-method patent, in short: nothing at all to do with speed of execution, or data compression, or other such trading-infrastructure-related feats.

08-03-09 © koinseb

Lawyers argued a business-methods software IP controversy before the United States Supreme Court on March 31. Or it was supposed to be a business-methods argument. But what was fascinating was that this argument (arising out of a controversy that doesn’t involve HFT at all) did come around to speed, data compression, and related technical feats as examples of patentability in their own right. The case in question is now known as Alice Corporation v. CLS Bank ...

Technology

Bitcoin: Regulation, Taxation, and Optimism
One informed observer suggests that bitcoin could become a permanent, mainstream, and regulated fixture in the world precisely by maturing past the dreams of its founders and enthusiasts.

bitc

A recent conversation about the present state of the bitcoin world with Shai Heffetz revealed that not all bitcoin bulls are alike. Heffetz, the managing director of InterTrader, an online contracts-for-difference platform and service provider, is upbeat about bitcoins, in an unusual way. I asked him about the failure of Mt. Gox. Some of the critics of the whole bitcoin phenomenon have pounced on this. A commentator on CNBC for example said that, due to Mt. Gox, ...