Not only eggs will be broken

Volatility skew didn’t exist before the 1987 market crash. Before then, the assumptions of the Black-Scholes option pricing model were felt to be about right. Constant volatility, continuously tradeable instruments with no discontinuities in prices, independent returns from one period to the next. Then the market crashed downwards exhibiting leptokurtic, negatively skewed returns and large […]

No nationalisation, more certainty and probably higher taxes

There are times when I’m impressed with elements of government and the ANC. It took them far too long, they allowed too much debate and uncertainty, but their ultimate conclusions on nationalisation and how to direct additional mineral wealth back into the fiscus, further develop a beneficiation industry around the mining industry are solid. I […]

Lose a Million

The Make a Million competition, as I’ve mentioned before, is an awful idea. It doesn’t promote investing or even “normal” trading, but rather massive, speculative risk-taking trading because the prize for performing well is nothing and the prize for performing best is significant. I’m continually disappointed that Moneyweb continues to partner with this distraction. As […]

Narratives vs facts

I don’t usually write about The Final Frontier, but this article has a great parallel to what I do write about. It’s worth reading the entire article, but the main message is that we cannot use the dream or story or fairy tale of imminent migration into space and other planets as an excuse not […]

Hedge fund managers don’t know macro

Listen I know John Paulson made an enormous amount of money betting against the housing markets in 2007. He made some excellent calls and made a tonne of cash. As Nassim Taleb would say though, that doesn’t necessarily mean he has skill or insight. He could just have been lucky. Most people lost money in […]

Why S&P downgraded

I don’t think many serious investors care that S&P downgraded US debt. Bond yields are down (more on this in my next post), which means prices are up. US stocks are down, but that’s more about concerns about US and global economic prospects than the credit of the US government. Nevertheless, S&P did downgrade. Why? […]