The International Herald Tribune ran with this article (PDF) recently. An excerpt:

Sticking with institutions that safeguard money instead of taking big risks with it may be the best course after a multiyear expansion, especially given the penchant that bankers have for poor timing. It is always possible that they have learned from past mistakes, but Sellar, for one, is not willing to bet too much on it. “I don’t think they’re more resilient,” he said. “They try to talk good talk about improved risk models and stress-testing different scenarios, but you’re never able to know which scenario will lead to a blowup. A lot of them didn’t manage to miss Enron.”

The ending analysis, at least the Enron part, is on target. The problem is the ‘squishy’ way they get to that understanding: its all fundamentally driven.

An updated link of all versions and all translations of my books.

Jeremy Siegel offers this view about recent market activity. An excerpt:

When stocks were in this uptrend, the market attracted many “trend followers” or “momentum players.” These are speculators who make no judgment about whether stocks are cheap or expensive but only want to jump on the bandwagon. There’s an old expression on Wall Street — “Make the trend your friend” — and that’s just what these speculators did. But these trend-followers knew that the bull market wouldn’t last forever. They protect their profits by placing stop-loss orders below the current price. A stop-loss order tells the market maker to sell whenever the stock penetrates a predetermined level. Because the market never moved down 2 percent for so long, many stop-loss orders were placed 2 percent below the market. Once the 2 percent limit was breached, a wave of selling broke out.

This is an interview I did last fall that just appeared in late February 07 (PDF version). As a fun contrast, this is a review of my book Trend Following seen recently:

I cannot believe that a reputable publisher actually picked it up. The only explanation is – Covel is “kissing up” to some big money hedge funds and uses his book to promote them, hence they muscled the publisher….a big cluster fuck if you actually paid money for this piece of shit.

I love crazy people! This guy sounds like he needs a hug from someone or at least some mild electric shock therapy.

I offered some comment (PDF) recently to a reporter who openly admitted she was new to the subject of George Soros. I think she did a good job of “getting it” for a newbie.

The paperback edition of Trend Following is out. It includes a second forward by Charles Faulkner. High resolution cover.

Today, New Century Financial Corporation was all the news. Stock cratered. Straight down. Get ready for the dog and pony Congressional hearings show. I am sure there were accounting problems. If they violated the law, executives should get ready for their own version of HBO’s Oz. However, don’t complain if you are still holding the bag at $1.66 a share. There were clear warning signs in the price movement long before the meltdown. There were no excuses for not exiting, that is unless you were dollar cost averaging (losers average losers).

From today’s New York Times:

Big Money Still Learning to Lobby By JENNY ANDERSON: The hedge fund industry seems resigned to no longer be a wallflower in Washington as it joins the lobbying dance with Congress.

Writing a book about the Turtles was an entertaining yet confusing process. It was entertaining because once the curtain was pulled back on the story and the characters were revealed as real people, not simply a homogeneous group of all presumed “winners”, true insights were revealed. What separates the winning Turtles today from those Turtles who have literally had no success since 1983? It is a core question addressed in my upcoming book. Why was the process confusing? Some Turtles who have never talked until now, opened up. Others who had gone on record over the years, got tight lipped. I still don’t know exactly what it is that some of them want kept from the public eye. In the end, they are all just people, which is motivating for everyone else who did not answer the 1983 and 1984 want ads.

From Trader Daily:

Does the public want to be protected from its own feeblemindedness in judging investment risk based on wealth? The SEC asked, albeit not in those words, and the public took ample advantage of the opportunity to comment. The answer was an emphatic: “No!” Last December the SEC proposed raising the required-asset bar for would-be investors in hedge funds and other pooled investment vehicles. The period for public comment on the suggested rule change ended on Friday, and the SEC had received more than 500 responses to what it had predicted would be an uncontroversial issue. Individuals from around the country protested the notion that assets in the safe were any way to judge financial acumen. Investors who qualify under current rules were horrified that they could be regulated out of the best and broadest range of investment opportunities available to them now. Some industry voices also questioned the impact on competition, as newly created hedge funds often depend on smaller investors to get off the ground. This feedback, though, may not be enough to influence the SEC’s ultimate decision on the rule. Since December, there has also been a contrary trend in thinking, which is that the higher-level entry requirement should also be extended to investments in private equity. As distinctions in investment strategy become harder to make among hedge funds, private equity and venture capital, the result may be a broader investor accreditation requirement applied to all.

More.

Am I the only person who thinks this is nuts and impossible to execute? Once the Social Investment Research Analysts weed out companies involved in nuclear power, major manufacturers of tobacco products, alcoholic beverages, weapons, and firearms, companies that have serious and persistent human rights problems or directly support governments that systematically deny human rights (does this rule Google out due to censorship in China?), the field has been narrowed hasn’t it?

I caught the headline “Are Some Stock Analysts Rewriting History?” An excerpt from the article:

In their paper titled “Rewriting History,” professors Alexander Ljungqvist of New York University, Christopher J. Malloy of the London Business School and Felicia C. Marston of the University of Virginia say they found 55,000 changes to the database from 1993 to 2002 that tend to make certain stock analysts look good. The database is widely used by fund managers, academic researchers, by regulators to track questionable activity on Wall Street — and by The Wall Street Journal to assemble its annual list of the best analysts.

Remember the Gomer Pyle surprise, surprise, surprise (MP3) line? It is amazing that this much effort goes into categorizing predictions. Am I surprised that efforts might go into making the prediction mavens look good? Not exactly.

Go to Second Article from Slate >