Moneyterms: investment & finance explained

The rate cut might not help much

Friday, 7th November 2008

There are a two reasons why the rate cut might not help as much as hoped — and why a big rate cut was required.

The first, which has attracted the most attention, is that it may not be passed on in full to borrowers. The other is that interest is a smaller component of the cash outflows on loans than in the past.

Magical market efficiency

Thursday, 3rd July 2008

Richard Beddard's comments on my recent book review, picks up on Mandelbrot's criticisms of the efficient markets hypothesis. However, Mandelbrot also describes how remarkably efficient markets can be.

If you are avoiding equities because of inflation...

Thursday, 3rd July 2008

...where are you putting your money that is any better? Equities represent ownership of business that own real assets and that sell goods or services at prices that should (in general) rise with inflation. What are the better alternatives that these investors are reportedly switching to?

More cross price elasticities

Wednesday, 25th June 2008

Following from my previous post (which, I failed to mention, included several things previously mentioned in a series of posts by Greg Mankiw) I think I have spotted another cross price elasticity of demand. Chili in Sri Lanka.

Mandelbrot's The Misbehaviour of Markets

Wednesday, 25th June 2008

I had high expectations of Benoit Mandelbrot's The (Mis)behaviour of Markets — simply because of Mandelbrot's stature as a mathematician. I was initially disappointed by the start of the book, but the latter parts of the book are fascinating.

Avoiding companies that use capital markets

Monday, 9th June 2008

While making some improvements to the page on rights issues I found my self coming very close to saying that investors should avoid companies that actually make use of equity capital markets.

Patents on fund management

Sunday, 18th May 2008

Patents are a topic I would usually post about on my personal blog. In this case, the subject of the patents is fundamentally weighted index trackers.

Commodity prices, Cross elasticities and inferior goods

Friday, 16th May 2008

Higher commodities prices, especially those of oil and rice, have given us some excellent examples of the cross price elasticity of demand. Apart from the usual boring changes like higher sales of small cars and greater use of public transport, there has been a increase in demand for camels in Rajasthan, while Liberians are eating maize or millet spaghetti.

Blodget and bad incentives

Wednesday, 14th May 2008

It amazes me that Henry Blodget still has an audience, given his track record, but that they seem to be tolerant of his spouting nonsense, as in this post on Google. He is also an example of the bad incentives in the investment industry.

Why insider trading matters

Friday, 9th May 2008

Some people think that the the way to deal with the problem of insider trading is to simply legalise it, or at least that the objections to legalisation are moral rather than economic. This does not take into account the likely effects on markets if insider trading is legal, and can therefore take place with no fear of the consequences.

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