An example of why Martin Wolf may now be the world's most respected business columnist. "Getting away with producing adulterated milk is hard; getting away with an investment strategy that adds no value is not." (þ: Marc Andreessen)
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An example of why Martin Wolf may now be the world's most respected business columnist. "Getting away with producing adulterated milk is hard; getting away with an investment strategy that adds no value is not." (þ: Marc Andreessen)
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Comments (3)
There's a good commentary on that article here: http://meganmcardle.theatlantic.com/archives/2008/03/hedge_funds_heads_i_win_tails.php
Posted by Ian | April 5, 2008 10:09 AM
Posted on April 5, 2008 10:09
I'm surprised that she would miss the moral component of the column, which is made crystal clear at the end:
It is in the interests of insiders to game the system by exploiting the returns from higher probability events. This means that businesses will suddenly blow up when the low probability disaster occurs, as happened spectacularly at Northern Rock and Bear Stearns.
Moreover, if these unfavourable events – stock market crashes, mortgage failures, liquidity freezes – come in stampeding herds (because so many managers copy one another), they will say: "Nobody could have expected this, but, now that it has happened to all of us the government must come to the rescue."
Posted by Colby Cosh | April 5, 2008 5:33 PM
Posted on April 5, 2008 17:33
... now that it has happened to all of us the government must come to the rescue.
Which is the real genius isn't it -- tax funded underwriting of the whole adventure. As a strategy it wouldn't have that much appeal if the first guys to fail took the idea down with it.
Posted by KevinG | April 6, 2008 12:42 PM
Posted on April 6, 2008 12:42