Comments on: Misuse of Statistics – Mania in Financial Markets

By: The Formula That Killed Wall Street at Curious Cat Investing and Economics Blog

The Formula That Killed Wall Street at Curious Cat Investing and Economics Blog — Mon, 13 Jul 2009 00:34:48 +0000

[…] find opportunities. However markets have physical, psychological and regulatory limitations. And markets frequently experience huge panics or manias. People continue to fail to model that […]

By: Curious Cat Management Improvement Blog » Management Improvement Carnival #58

Fri, 20 Mar 2009 15:33:46 +0000

[…] Three Sigma Bubble? Nonsense! by Marc Hersch – “Grantham’s argument is fallacious. The assumption underlying the use of three-sigma limits is that the system being characterized is in a state of control.” [investors and economic planners consistently fail to understand the volatility of markets – John, see Misuse of Statistics – Mania in Financial Markets] […]

By: Curious Cat Management Improvement Blog » Financial Market Meltdown

Curious Cat Management Improvement Blog » Financial Market Meltdown — Fri, 10 Oct 2008 16:44:34 +0000

[…] “is blood in the street” “buy when everyone else is selling”) but timing frenzy driven markets is basically impossible. A year after a market recovery has started it is easy to see how wise it […]

By: Leverage, Complex Deals and Mania at Curious Cat Investing and Economics Blog

Leverage, Complex Deals and Mania at Curious Cat Investing and Economics Blog — Sat, 04 Oct 2008 19:16:37 +0000

[…] Anyone involved in finance should understand mania in the markets. It is not a shock that financial markets do irrational things. They do so very frequently. Anyone who has not read, Manias, Panics, and Crashes: A History of Financial Crises, should do so. Leverage often is a catalyst that turns bad investments into panics that damage the economy. A previous post on this topic: Misuse of Statistics – Mania in Financial Markets. […]

By: Buffett's Fix for the Economy at Curious Cat Economics Blog

Buffett's Fix for the Economy at Curious Cat Economics Blog — Fri, 03 Oct 2008 21:40:14 +0000

Buffett, the chairman and CEO of Berkshire Hathaway (BRK.A), called the problems facing world markets “unprecedented” and warned of a “disaster” if Congress does not move faster to shore up the economy…

By: Stock Market Decline at Curious Cat Investing and Economics Blog

Stock Market Decline at Curious Cat Investing and Economics Blog — Thu, 18 Sep 2008 16:34:08 +0000

[…] and some bad periods. Diversification can help smooth out the extremes but no the markets are often driven by emotion. And those emotions (greed, fear…) cause extreme price swings. I am getting ready to invest […]

By: CuriousCat: Central Bank Intervention Unprecedented in Scale

CuriousCat: Central Bank Intervention Unprecedented in Scale — Mon, 16 Jun 2008 01:23:12 +0000

“The Fed though is in the process of a very large change in the composition of its balance sheet, as it will temporarily be holding Agencies as an asset against its liabilities rather than Treasuries…”

By: Curious Cat: Not Understanding Capitalism

Curious Cat: Not Understanding Capitalism — Tue, 08 Apr 2008 00:42:19 +0000

Maybe the latest huge bailout will change how things are done. I doubt it. New rules will be put in place. Plenty of people will pay politicians plenty of money to assure their methods of subverting the intent of those rules are allowed to continue…

By: Curious Cat Science and Engineering Blog » Financial Engineering

Curious Cat Science and Engineering Blog » Financial Engineering — Sat, 25 Aug 2007 23:14:27 +0000

I understand there has been a large move toward using highly complex math for financial strategies. I understand many derivatives and other investment vehicles have been created. I just don’t really get what makes some of it engineering…

By: Matt

Matt — Fri, 24 Aug 2007 22:09:45 +0000

Smart people can and do make huge mistakes when investing. While mathematical models provide an interesting framework for investing, if they are used too exactly without thought for other variables, the results can be devistating.