Holes in Some of Finance’s Critical Assumptions: A Dialogue with Massif Partners’ Kevin Harney (Part Two)

Posted by Jason Apollo Voss on May 30, 2012 in Blog | 0 comments In part one of “Holes in Some of Finance’s Critical Assumptions,” Kevin Harney of the hedge fund Massif Partners discussed some of the market distortions arising from critical finance assumptions like Brownian motion and normal distributions used in options pricing. What are some of the effects of these choices? What can be done differently? Here is what Harney said. Jason Voss: If I may...
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Holes in Some of Finance’s Critical Assumptions: A Dialogue with Massif Partners’ Kevin Harney (Part One)

Posted by Jason Apollo Voss on May 29, 2012 in Blog | 0 comments In finance even basic assumptions — like which technique to use to calculate prices for such financial instruments as derivatives or how you calculate rates of return for assets — determine how you see the world. If the techniques have flaws, then your understanding and insight into things as fundamental as prices and return are also flawed. Chief among the flaws are Brownian motion used as a...
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Here We Go Again: Europe Crisis Regains Gravity for Fixed-Income Investors

Posted by Jason Apollo Voss on May 17, 2012 in Blog | 0 comments Three months ago, I said that investors and journalists had largely moved on from the European sovereign debt crisis. Yet in the past month, the crisis has regained prominence in the forefront of the consciousness of pundits. Interestingly, most of the concern is arising not out of new events but rather out of the movement and consequences of the eurozone’s titanic debt. Although Europe is...
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Bankable Insights: Overcoming Anxiety Is Key to Investment Success

Posted by Jason Apollo Voss on May 16, 2012 in Blog | 0 comments Back in 2007, Wall Street Journal investing columnist Jason Zweig contributed a fascinating essay entitled “Fear” to a monograph, Behavioral Finance and Investment Management, published by the Research Foundation of CFA Institute. The essay was adapted from Zweig’s book, Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich, and it’s just as relevant...
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Daniel Kahneman: Psychology for Behavioral Finance

Posted by Jason Apollo Voss on May 14, 2012 in Blog | 0 comments Nobel Prize winner Daniel Kahneman is one of the founding fathers of behavioral finance. Although he holds a doctorate in psychology, not economics, he has had a profound effect on the dismal science. These days economic actors — that’s you and me — are not seen as rational, but rather human and prone to cognitive biases. This simple observation holds significant implications for the theory and...
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