I knew an acclaimed addiction counselor who used painting in her therapies. She authored a book titled
Grass is not always Green; Skies are not always Blue.
I wanted to write a sequel titled
Grass is not always Green; Pdfs are not always Gaussian.
Except that if a crash is imminent, nobody's told the exuberant investors still putting their savings into stocks!
Isn't that practically a required precursor to a crash? All crashes (as far as I know) follow immediately on the heels of exuberant investors piling in to the market because they are sure it will keep climbing...
Can YOU spot the Top? If you sell after a 5% drop you may watch from the sidelines as the market recovers and sets a new high. The crash is still coming, but a year or three after you sold.
There are smart traders proud to have gone 3-for-3 or 4-for-5 on certain predictions. But as of now, they are all zero-for-zero in this unprecedented situation: A band of malicious billionaires joining forces with the evil dictator of Russia in an apparent attempt to collapse the government of the world's major superpower.
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Amusing(?) anecdote: In the 1990s there was a "hedge" fund with the misleading name Long-Term Capital Management. Using mathematical models, the fund made bets, primarily on the spreads between different classes of investment-grade bonds. Among the founders were two Professors of Economics or Finance who developed those models and in 1997 were awarded the Nobel Prize for Economics.
A year after the Nobel Prizes, LTCM's bets went hay-wire despite a generally bullish market; the fund became insolvent; and the Federal Reserve Bank of New York had to step in, organizing a consortium of 14 large banks to absorb the fund's assets and liabilities. LTCM's strategies were compared to "picking up nickels in front of a bulldozer," though this meme may have been coined AFTER the failure. Although taxpayer money was never at risk, this action by the Fed -- which became precedent for much larger interventions a decade later -- was widely condemned.
The Nobel Laureates might have acted more prudently had they read the book.
Grass is not always Green; Pdfs are not always Gaussian.
Lovers of post-rational capitalism may be pleased to note that the rich LTCM directors had negotiated a shenanigan with the Union Bank of Switzerland to change their income to gains taxed at a lower rate. This turned into a loss of nearly a billion dollars for UBS.
dnyuz.com
