Comments on Brian Reese Blogs: Credit Default Swaps: Weapons of Financial Destruc...

You made some good points there. I did a search on...

2009-12-30T11:38:37.961-08:00

You made some good points there. I did a search on the topic and found most people will agree with your blog.

Hi there, I found your blog via Google while searc...

2009-12-29T02:04:02.810-08:00

Hi there, I found your blog via Google while searching for first aid for a heart attack and your post looks very interesting for me.

Hey Cameron,Thanks for the comment! I didn't know ...

2008-10-25T20:02:02.269-07:00

Hey Cameron,

Thanks for the comment! I didn't know much about this stuff either until I dug in. Take care!

-Brian

Great post Brian, I did not know anything about th...

2008-10-25T08:08:58.097-07:00

Great post Brian, I did not know anything about this financial instrument so it was a great education for me. How's married life treating you? Hope all is well.

Yeah, I hear you. I neglected my fiancé for about ...

2008-10-13T10:23:26.811-07:00

Yeah, I hear you. I neglected my fiancé for about six months while studying for the exam, so now I am trying to make up as much as I can.

As for the markets, I would have to borrow a bit from Soros (whose idea is not as original as some may think), psychology, markets and the reaction of the market to its own psychology is fed right back into the system itself.

For example, the general perception was that no one is liquid any longer and all investment houses are out of money. This belief (which was untrue in a number of cases) led to that very reality coming about - self-fulfilled prophecy, as it is widely known. Witness the example of Bear. Once it went under, people were shocked to find out that had there not been widely circulated rumors, the bank would have done okay given the state of its books.

I don't know if you already have, but take a look at When Genius Failed by Lowenstein. It is a short book, but is quite informative. You will see a number of parallels between LTCM and what happened in the present environment. Here is Lowenstein's own assessment in light of LTCM:

http://www.nytimes.com/2008/09/07/business/07ltcm.html?_r=1&scp=6&sq=roger%20lowenstein&st=cse&oref=slogin

Cheers,

Alex.

Hi Alex,Thanks for the great comments and info. I ...

2008-10-13T09:57:48.475-07:00

Hi Alex,

Thanks for the great comments and info. I am very interested in behavioral economics and anything to do with investing/decision making. At this point, I partially agree that the markets are moving away from an equilibrium approach. The problem I see is: How do you study & analyze other approaches. I also believe that our feelings, worries, and market news is "pre-priced" into the stock market already. How else can you explain the DOW dropping 200+ points after the Government bailout plan? The reason: Because expectations are already priced into the market.

Studying is going ok, except this thing called "life" is slowing me down. Ha ha.

640 is a really good score. With a strong package, you should set yourself up for just about any school.

Talk to you later.

-Brian

640. Took it back in September. Can't say that I a...

2008-10-12T12:27:56.615-07:00

640. Took it back in September. Can't say that I am not disappointed, given my performance on the practice tests.

But, at this point, I have pretty much finished the application process. I have written and polished all of my essays. Filled out all of the apps, and provided recommenders with forms and deadlines.

Otherwise, I am just enjoying the time I have to read, once again. Speaking of which, I am reading King of the Club right now, which is pretty interesting. I also have The Last Tycoons lined up. Lazard is going to be a very interesting company to watch in the new Wall Street environment.

As for Why Stock Markets Crash, I just want to warn you that it is a pretty technical book and will necessitate quite a bit of research on the side. However, if you stick with it, you will learn A LOT. And, if you like that book, you would probably also enjoy The Misbehavior of Markets by Benoit Mandelbrot. "Manias, Panics, and Crashes" is a classic by Kindelberger, and is also worth looking at.

I know that you are quite interested in investing, and I have to tell you that the equilibrium approach is done with. A former professor and I consistently compare notes on the research coming out today and what is happening in the markets, and all fingers are pointing in a new approach where econophysics and behavioral economics are taking over. Look into this stuff.

How is your studying and school search process going??

Alex,Great article. I have never heard of anything...

2008-10-08T19:15:36.587-07:00

Alex,

Great article. I have never heard of anything other than the traditional equilibrium approach to market volatility. I'll have to read Why Stock Markets Crash.

Thanks for the comment. How was your latest GMAT?

-Brian

Take a look at this article and let me know what y...

2008-10-08T10:34:58.485-07:00

Take a look at this article and let me know what you think. I have studied this kind of an approach (complexity theory and network theory) for about three years in school. This article is a great intro. For more heavy stuff, see Why Stock Markets Crash by Didier Sornette.

http://www.nytimes.com/2008/10/01/opinion/01buchanan.html?scp=1&sq=marc%20buchana&st=cse