Archives of “nobel prize” tag

rss

3 Books

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

Last week , I plucked two behavioral finance books out of airport bookstores. Apparently Blink has triggered a new title and jacket aesthetic, as both of these books look as if they could have been companion volumes.

The quickest read of the bunch, Sway: The Irresistable Pull of Irrational Behavior (Ori Brafman and Rom Brafman), can easily be polished off in a three-hour flight. Frankly, this is the book’s main attraction, but also its weakness. Here is an entertaining read that provides a vignette-centric approach to illuminating the decision-making shortfalls humans are prone to making. Theories and conclusions are loosely woven around the vignettes to provide structure and coherence, yet most of these are self-explanatory from the examples. Sway has the readability of Freakonomics and is just as likely to be consumed in one sitting, but ultimately does little more than whet the appetite for anyone with an interest in getting to the full menu of behavioral finance. As an hors d’oeuvre, however, it is most enjoyable.

At first glance, Nudge: Improving Decisions About Health, Wealth and Happiness (Richard Thaler and Cass Sunstein), looks to be an only slightly heartier meal. In fact, Nudge retains the readability of Sway, but is much more comprehensive, better organized and yet has the heft of an academic introduction to behavioral finance. Nudge will probably require an overseas flight to digest, and is better suited for savoring over the course of multiple sittings.

In another league entirely is the encyclopedic Choices, Values, and Frames (Daniel Kahneman and Amos Tversky), which is a comprehensive collection of articles that represent the definitive thinking on much of the field of behavioral finance, which Kahneman and Tversky were instrumental in establishing. One could argue that Choices, Values, and Frames was the book which was largely responsible for Kahneman being awarded the Nobel Prize following Tversky’s death. This book is a densely packed buffet of ideas that is probably best consumed in small chunks over the course of weeks or months. It is not necessarily an easy read, but the ideas and research that went into it and the reflection and rethinking of the investment world that come out of it make it one of the most influential books in the realm of finance and investments.

Einstein's Scribbled Theory On Happiness Sells For $1.6 Million – 195x Highest Expectations

  
Analysis, Education
#  #  #  #  #

A scribbled note by Albert Einstein which described his theory on the key to happy living was sold at auction in Jerusalem for $1.56m.

According to The Telegraph, the winning bid for the note far exceeded the pre-auction estimate of between $5,000 and $8,000,according to the website of Winner’s auction house.
“It was an all-time record for an auction of a document in Israel,” Winner’s spokesman Meni Chadad told AFP…Bidding in person, online and by phone, started at $2,000. A flurry of offers pushed the price rapidly up for about 20 minutes until the final two potential buyers bid against each other by phone. Applause broke out in the room when the sale was announced.
The newspaper reports that Einstein was on a lecture tour of Japan in 1922 and had recently been awarded the Nobel prize. Einstein didn’t have cash to pay a tip to a bellboy in the Imperial Hotel in Tokyo, so he gave him two notes, predicting they would be worth more than a tip. He is reported have said.

 “Maybe if you’re lucky those notes will become much more valuable than just a regular tip.”

The Telegraph continues, Einstein dedicated his life to science, but suggested in the notes that fulfilling a long-term ambition doesn’t necessarily guarantee happiness.
The note said.

“A quiet and modest life brings more joy than a pursuit of success bound with constant unrest.”

The anonymous buyer was from Europe.
The notes were sold by an anonymous Hamburg resident who commented “I am really happy that there are people out there who are still interested in science and history and timeless deliveries in a world which is developing so fast.”
On the second note was written “where there’s a will, there’s a way”. It sold for $240,000.

Milton Friedman's Brilliant 2 Minute Defense Of Capitalism

  
Analysis, Education, Video
#  #  #  #  #  #  #  #  #  #  #

Nobel prize winning economist Milton Friedman would’ve turned 101-years-old today.

And there are plenty of people who would’ve loved to have him around today to witness how the Federal Reserve is running monetary policy.

Friedman, who is famous for his ideas on monetarism, was against the idea of a Federal Reserve.  However, he did support the expansion of money supply. (more…)

The Inviolable Rules for Traders

  
  Education
#  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #  #

1. Reward is always relative to risk: If any product or investment sounds as if it has lots of upside, it also has lots of risk. If you can disprove this, there is a Nobel Prize waiting for you.

2. Asymmetrical information: In all negotiated sales, one party has far more information, knowledge and experience about the product being bought and sold. One party knows its undisclosed warts and risks better than the other. Which party are you?

3.Good advice is priceless: I know, easier said than done. The Street buys the best legal talent, mathematicians and strategists that money can buy. Make sure you have expert advisers and lawyers working for you as well.

4. Motivation:Always ask, what is the motivation of the outfit selling me this product? Is it the long-term stability and financial health of my organization — or their own fees and commissions?

5. Legal documents are created to protect the preparer (and its firm), not you or yours: In the history of modern finance, no large legal document has worked against its drafters. Private placement memorandums, sales agreement, arbitration clauses — firms use these to protect themselves, not you.

6. Performance: How significantly do the fees, interest rates commissions, etc., have an impact on the performance of this investment vehicle over time? Determining for yourself what the actual cost of money is will avoid more heartache in the future.

7. Shareholder obligation: All publicly traded firms (including investment banks and bond underwriters) have a fiduciary obligation to their shareholders to maximize profits. This is far greater than any duty owed of care to you, the client. Always ask yourself whether this new product benefits the shareholders or your organization. (This is acutely important for untested products.)

8. Reputational risk: Who suffers if this investment goes down the drain? Who gets fired or voted out of office if this blows up? Who suffers reputational risk?

9. Keep it simple, stupid (KISS): It’s easy to make things complicated, but it’s very challenging to make them simple. The more complexity brought to a problem, the greater the potential for things to go awry — not just astray, but very, very wrong.

10. There is no free lunch: Repeat after me: There is no free money, no riskless trade, no way to turn lead into gold. If you remember no other rule, this is the one that will save your hide time and again.

The Most Influential Prizes in the World is The Nobel Prize in Economics

  
Analysis, Education
#  #  #  #  #  #  #  #  #

I’ve been mum on the Nobel prize in economics because I honestly don’t know much about Jean Tirole and his microeconomic work.  But I think we should silence one discussion that inevitably arises every time the award is handed out.  That’s the idea that the award is somehow fake or something.  It’s true that the award in economics wasn’t conceived by Alfred Nobel and was added over 70 years after he died.  And it’s true that the award was created by the Swedish Central Bank in large part to celebrate its 300th anniversary.  So what?

No matter how many times people say that the award isn’t “official” it just doesn’t matter.  The reason why is because the award actually acts as an incredibly powerful status symbol.  If you’re an economist with a Nobel prize you are automatically lifted onto a pedestal above everyone else.  Your words carry greater influence and your impact on the world undoubtedly increases.  This is particularly true in the field of economics because economists have such a tremendous impact on public policy which impacts all of us.

In my opinion, it doesn’t matter one bit if Alfred Nobel didn’t conceive the award.  It doesn’t matter if certain people think it’s fake.  The bottom line is that winning the Nobel prize in economics is a huge huge deal that lifts the winner from being important to being beyond important.  Alfred Nobel might not have approved of the award, but the fact that his name is attached to the economics prize is a big deal.  And its winners will continue to have a tremendous impact on all of our lives in the future.  That reason alone makes the Nobel in Economics important and arguably more important and impactful than any other Nobel that is awarded.

Oh, and congratulations Mr. Tirole!  Don’t let your new found influence go to waste….

Go to top