Book review

Hedge Funds as Metaphor: And Not in a Good Way

Apr 22nd, 2013 | Filed under: Book review, Hedge Fund Industry Trends, Media Coverage of Hedge Funds, Today's Post

One take-away from David Stockman's new best selling book is that the phrase "hedge fund" may well be on its way beyond descriptive significance. In the public realm, a "hedge fund" is now as much a metaphor as is a "Trojan horse." It is becoming a metaphor for any institution's failure to hedge.

A Fresh Look at Track Records and Risk

Nov 29th, 2012 | Filed under: Book review, Hedge Fund Industry Trends, Hedge Fund Operations and Risk Management, Risk management, Today's Post

In Jack Schwager's view, the hedge fund industry as a whole is not a "mirage" at all. But relying on the past track record of specific funds or strategies: that is a dangerous reliance upon a mirage. Perhaps suggest that Grandma should put her nest egg in a diversified fund of funds.

Risk Budgeting: Newer Approaches than the ‘New Approach’ of 2000

Oct 10th, 2012 | Filed under: Book review, Risk management, Today's Post

It is not simply that VaR as classically formulated presumes a Bell curve with the very narrow tails that implies (although that is one of Stephen Rahl's criticisms in his contribution to this book, it is by now pretty much everybody's criticism). Other problems are: that VaR treats the past as the guarantor of the future, and that it arbitrarily identifies variance with risk.

Poisoning the Goose while Taking its Alpha Eggs

Jul 9th, 2012 | Filed under: Algorithmic and high-frequency trading, Book review, Today's Post

What happened after decimalization? Spreads did fall, but these authors say that “displayed liquidity at the National Best Bid and Offer” also fell, at least in part because there were 100 price points for each dollar now, where once there had been eight or 16, so limit orders no longer come in clusters. This in turn made “pinging and sniffing for order flow” a lot easier, heralding the rise of the sort of algorithmic trading that is to the ordinary retail investor what a hawk is to a mouse.

McMansions Aren’t Bank Accounts: Now What?

Mar 22nd, 2012 | Filed under: Book review, Real Estate, Today's Post

The authors of a new book from the Milken Institute contend that one factor working against the recovery of the housing market in the U.S. is that the residential finance system is almost entirely a ward of the federal government, "a situation that cannot be indefinitely sustained without seriously damaging monetary stability and the prospects for a return to long-term growth," they write. It is imperative, these authors believe, that the United States get its private investors involved again in the financing of housing.

Yes, the Bubble Burst: That’s What Bubbles Do

Mar 7th, 2012 | Filed under: Book review, Today's Post

The lending encouraged by the monetary policies of a Greenspan or a Bernanke “was bound to put money into the hands of people who didn’t know what to do with it,” writes the author of a new book. The consequences of such lax policies are what we have witnessed since 2007. Bubbles eventually burst, simply because that is what bubbles do. It is better to stop blowing them than to look about for a needle to blame for the prick.