Monthly Archives: October 2014

Bullard Saves the Market?

James BeadleWell, the title is tongue-in-cheek, but today James Bullard’s comment did turn the market around. The Fed, he suggests, should consider pausing the taper of QE and keeping the programme open. Up go stocks, down go bonds. Then the analysis starts.

The media is fully of criticism, he shouldn’t have said it, he contradicted himself, he doesn’t have voting rights so he doesn’t matter anyway… Lots of noise, let’s cut to the chase. Continue reading

When Genius Fails – The Bond King Is Dead, Long Live the Bond King

JanusOne of the cornerstone financial history publications, a must read for students business administration and finance, carries the title When Genius Failed. It is an impressive report into the most spectacular hedge fund failure of all time, the collapse of Long-Term Capital Management. LTCM made some strategic mistakes, but overall it was an impressively diversified fund, rigorously implementing financial theory to aggressively capitalise on inefficiencies in the market. You can’t say that LTCM invented arbitrage, but the firm surely applied it on a scale never seen before. Nor since. LTCM went bust in a spectacular demonstration of why financial theory is flawed. Hence the importance that new practitioners read the book.

This article, however, isn’t about LTCM. Continue reading