Tag Archiv: availability heuristic

On the Tail-End of the Probability Distribution

3. December 2012
Weintatsting

“You can learn a lot about saving money from millionaires,” my mother-in-law used to say as she headed off to Aldi on her shopping trips. I often indulged her food preferences, but when it came to wine I have never been convinced there are cheaper alternatives to Bordeaux that are just as good. I like to think I am not a wine snob, and I do not treat wine labels as status symbols, but quality is important for me. So the idea of being able to find an enjoyable bottle for less than five euros is something I struggle to imagine, especially when much of that price is composed of value-added tax, retail margins and glass.

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Diversifying Away the Chance of Wealth

26. September 2012
Garage

Mark Zuckerberg, Bill Gates, George Soros, Larry Page, Sergei Brin – I could go on with this list of people who became super-rich by putting all their proverbial eggs in one basket. There is no doubt about it: to achieve extreme monetary outcomes, one has to accept extreme gambles. Portfolio diversification in the spirit of Harry Markowitz is alright for those who are content with middle-of-the-road returns – one will probably not go broke (at least, no sooner than everyone else) if one’s capital is spread across a variety of asset classes, sectors and geographical regions. However, with diversification, one’s investment returns are also unlikely to excel.

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Anatomy of an Analogy

24. September 2012
Fotolia_7732600_Mud

New York Fed Governor, William Dudley entertained his audience during a recent speech with an analogy about the US central bank’s aggressive monetary policy stance. The US economy, he mused, is like a car stuck in the mud: ‘You don’t stop pushing the moment the wheels start turning – you keep pushing until the car is rolling and is clearly free.’ The reasoning was undeniable. It is obvious that if you stop pushing the car will simply slip back into the mud.

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The Past Was Better Than I Remember

11. July 2012
Flughafen_mini

Radiohead in an open air concert at the legendary ‘Waldbuehne’ in Berlin, a babysitter on hand for our son in the form of my sister, who lives in the German capital, and the two of us enjoying a balmy July evening. Yeah – we had this wedding anniversary all planned out. At least, that is what we thought when we bought the tickets last winter.

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Facebook – the $100bn Question

16. May 2012
facebook

The one wants to have it at any price; the other wouldn’t touch it with a barge-pole. There is no doubt that the Facebook IPO has polarised opinion. Still, if everything goes to plan, the social network will come to market at a price that values the company at $100bn. That is as much as a PepsiCo, a Total, or a Unilever. Is Facebook really worth that much?

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A Dutch Tale of Overreaction

27. April 2012
Tulpen

Even a dull picture can capture attention when colourfully painted by the media. The opportunity to do so emerged this week with yet another negative story from the eurozone. The target was a country that is stable, whose unemployment is among the lowest in the EU, and which boasts a trade surplus and years of responsible budget management. The collapse of the Dutch government was the result of disagreement over budget cuts in 2013 and movements to further austerity.

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Colourful Dogs Bark, Dull Caravan Passes

20. April 2012
Wahlen

With the first round of presidential elections in France approaching, I have been forced into the realisation that my long-held belief in a Nicolas Sarkozy win seems stretched. Poll after poll in the past six months have favoured the socialist challenger, Francois Hollande, should it come to a second round run-off between him and the centre-right incumbent, Sarkozy. Yet, I held on strong despite the knowledge that these polls were conducted among representative samples of voters, and that second-round voting intentions remained stubborn. Couldn’t I detect a hint of irrationality in my own behaviour along the way?

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Unhappy Birthday for the Euro

4. January 2012

Back in 2002, with the freshly-minted coins in my euro starter kit, I bought a movie theatre ticket. Those shiny new coins had an almost comic feeling – I regularly had to turn them over to check what each was worth. Today, ten years after the introduction of euro notes and coins, it is difficult for me to remember what it was like to pay with the old D-Marks. My first proper salary was in euro; so was my first rent payment. The bothersome mental conversion back into D-Marks was something that I abandoned after just a few weeks.  The euro now courses through my veins (and, sadly, slips through my fingers).

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Third-Party Insurance for Mr Bean

28. October 2011

When the hapless Mr Bean, through a string of clumsy gestures, manages to convert a harmless sneeze into the destruction of a priceless painting, movie audiences laugh until they cry. Nobody actually thinks that something like that could happen in real life. They are wrong; not only does it happen, but Forbes magazine has taken to documenting the most expensive mishaps. Take the example of the Porsche owner who tried to dry the floor mats in his car using a leaf blower balanced on the back seats.

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Emperor Tremonti

13. July 2011

‘If I fall, Italy falls. If Italy falls, the euro falls.’ Italy’s economics and finance minister, Giulio Tremonti, made this declaration to his staff at the weekend as news of a corruption scandal within his inner circle became known.  With all due respect, Mr Tremonti, isn’t that a bit much? A Roman emperor couldn’t have said it better.

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Costly Thrift

23. March 2011

Rising gasoline prices have a tendency to over-focus motorists’ attention on what is anyway the most salient cost of vehicle ownership: the price of the fuel. However, the carburant is rarely the greatest cost. Depreciation is typically where the heavy burden on motorists’ pockets lie, especially when it comes to new cars. However, because we refuel regularly but often only consider depreciation when we change cars, it all too often is overlooked.

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Women’s Tears – The Passion Killer

14. January 2011

Somebody tweeted yesterday about new research that shows the devastating effect the smell of women’s tears has on men’s testosterone levels[1]. I immediately recounted the news of the discovery to Todo, my blogger-in-crime, who informed me that he had already gotten wind of it – the story that is, not the smell.

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A ‘Nostalgic’ Break-Up of the Eurozone

13. December 2010

In the middle of an EU debt crisis, especially one where Germany is seen as the paymaster-of-last-resort, it is no surprise that many Germans are nostalgic for their long-lost currency.  A couple of surveys recent showed that more than half distrust the euro and think the deutschmark was a better money. One survey revealed that 29 percent believe the eurozone is in danger of breaking up as a result of the crisis[1].  

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Who’s Afraid of the Big, Bad Shark?

7. December 2010

Worldwide, which of these occurrences claim the most lives: shark bites or falling coconuts?  Few people hesitate before answering shark bite. For me too, when I first read the question, the image of endless rows of razor-sharp shark teeth appeared infinitely more deadly than that of a hairy coconut.  In reality, though, 15 times as many people are killed by falling coconuts than by shark bites.

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Brain Candy

23. November 2010

Demonstrations in the Irish capital, Dublin, yesterday looked like a publicity stunt – the narrow-angled images and the presence of more photographers than demonstrators gave it away – but the foul mood of the Irish public is undeniable.

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Unjust desserts

15. November 2010

If not the most radical reform to the welfare system, as the UK’s coalition government claims, it is surely the most comprehensive. All the people I spoke to in Britain last week (all working people, by the way) seemed to be in agreement with the plan to bundle benefits into a single payment, to scrap some of them, and to introduce penalties and forced placements for the jobless.

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Lifelong

11. November 2010

I met an old acquaintance in the sports studio the other day. After the usual small talk he asked me, ‘Do you remember a couple of years ago, the studio offered us the possibility of a lifelong membership?’ My recollection was vague at first, but then it came back to me.

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All’s well that ends well?

19. October 2010

Like many other viewers, I watched last Saturday night’s world championship heavyweight boxing match between Vitali Klitschko and Shannon Briggs from the comfort of my living room. Nevertheless, by the sixth round, I started to feel phantom pain around the eye and jaw and a huge amount of sympathy for the visibly tattered challenger Briggs.

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What the Holy See saw

27. September 2010

There was a joke circulating Europe’s watering-holes last week: How is a washing machine like the Vatican’s bank? They’re both used for laundering.

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Beware the silver-tongued ‘boffins’

14. September 2010

Silver investors are celebrating the metal’s return to $20, but those who were around the last time silver crested above that level in 2007 won’t soon forget the rally’s brutal aftermath – prices soon retched to $8.50. Still, the current market enthusiasm is very similar to that which prevailed back then. Retail investors are once again being egged on with the prospect of prices running up to $50 an ounce.

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September’s infamy

2. September 2010

‘Sell in May, go away; but remember, come back in September.’ Or was it November? Traders love to recount how Septembers have treated them terribly and October is already famously known as the month of the Crash.

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The bubble patrol

24. August 2010

The latest meme flying around financial markets is the ‘bond bubble’, in which traders and commentators are quick to liken the present US debt market to last decade’s dot-com bubble. Cautioners note that $6,000bn was wiped off the stock markets in the dot-com crash, so we would do well to heed their words this time around.

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Japan’s economic wreck

17. August 2010

  

Japan’s economic output fell significantly more in the second quarter than analysts had expected. Moreover, its GDP has now slipped below China’s to place the country at number three in the world’s economic rankings. China was able to muster $1,337bn in output for Q2, while Japan ‘only’ managed to produce $1,288bn. The news spread like wildfire, simultaneously spreading goodwill or hazard to financial markets throughout the world.

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The Hayward expiry

27. July 2010

On InTrade.com, a spread-betting website, a contract settled ahead of expiry today: ‘Tony Hayward to depart as CEO of BP before midnight ET 31 Dec 2010’. For many, this conclusion was an inevitable result of the company’s response to the Gulf of Mexico oil spill. Outspoken investor, Jim Rogers, called him the ‘sacrificial lamb’; as the public face of BP in the US, it was something that ‘had to happen’ if the company was to move on.

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