‘What’s going on?’ I thought to myself when the price of bitcoins leapt beyond $900 this week. It had increased four-fold since that drizzly Thursday afternoon two weeks ago when I tortured myself over whether I should buy some at $220. If only, just for once, I had ignored my gut instinct and listened to my blogger-in-crime, Herman. Of course, now he cannot help but remind me of his timely advice: “Didn’t I tell you’ve got to get some of those bitcoins!”
I’ve gotten into something of a pickle with this latest trading position. Just a few weeks ago is seemed that all the operational and economic stars were aligned to send this stock into the stratosphere, but things did not work out like they were supposed to. It is not a complete disaster, but there were numerous little ‘misses’ on the way. So, although the broader equity market is reaching a 52-week high, my stock is closer to its 52-week low, and I am losing money.
My previous post discussed the hopes for a shift in corporate cultures – in particular, in investment banking – and concluded with an introduction to behavioural ethics, a new discipline that among other things should help us all to make more ethical decisions. This is sorely needed because practically every enterprise today bases its ethical guidelines and codes of conduct on normative ethics, i.e., on an idealised model of how people are supposed to evaluate ethical dilemmas.
I couldn’t resist another trip to Venice with the family this year. Despite the numerous complaints one so often hears, it is undoubtedly my favourite European destination. Yes, it is very warm at this time of year, and it is often overcrowded with tourists. The lagoon does stink a bit
A tiny section is reserved in every newspaper for prior errors, typos, misunderstandings and other bloopers to be publicly set right. These errors are often mildly embarrassing for the editor so, in the eyes of the reader, a printed admission of guilt is punishment enough and makes everyone feel better. The erratum published in yesterday’s Financial Times might be a little more difficult to digest for some readers though. It also provides an interesting demonstration of how cognitive dissonance is reduced and induced.
I was so impressed by a lecture on the fascinating subject of ‘Economics and Ethics’ by Julian Nida-Rümelin, a former German culture minister and currently professor of philosophy and political theory at the Ludwig-Maximillian University in Munich, I literally ran out and bought the book. Nida-Rümelin’s newest publication, entitled The Optimisation Trap, deals with the philosophy of a human economy.
“Turning back and climbing down is one of the most difficult decisions a mountain climber has to make. Perhaps, the most difficult.” The Tyrolean mountaineer, Hans Kammerlander, made the point very succinctly. It was only recently, though, that I got a glimpse of just how difficult the decision is to abandon an expedition and to turn back.
Moving house is one of life’s most stressful events. It costs sweat, nerves, and usually a handsome sum of money too. For that reason, people tend to stay put, avoiding all unnecessary changes of address. For us, though, even though we moved into our rented apartment a little over a year ago, change is again in the air.
My son came down with a frightful case of bronchitis recently. He wasn’t able to go to the kindergarten and I was obliged to stay at home to nurse him back to health. Skipping three days off work left me with a bad conscience. Even though I had a good reason for my absence, I didn’t feel good at all. However, had I done things differently, i.e., gone to work and had someone else look after him, it probably wouldn’t have felt any better. With the knowledge that his infant immune system was besieged by a high fever and a wrenching cough, I might have spent an unproductive day worrying about his well-being.
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?
Before we became parents, my husband and I used to enjoy slipping across European borders for a weekend break. Since our son came along, though, the frequency of these getaways has noticeably shrunk. So it was great to get back on a plane – the three of us, this time – for a weekend trip to Paris. He is just 15 months old, but he was very well behaved in the plane, in the hotel, in the restaurant, and at the museum. By the time we got home on Sunday, he was so overwhelmed by all the new experiences that he fell to sleep immediately, leaving us to enjoy an evening en tête-à-tête.
The UK government has gotten itself into a pickle over its unpaid work experience scheme for the young unemployed. The employers who have taken part in the scheme have been so embarrassed by the media coverage of protesters describing the placements as ‘slave labour’, they have threatened to withdraw. As a result, the employment minister has now had to do a U-turn on the plan to sanction those who drop out of the eight-week placement with a suspension of benefits for two weeks.
Gold mining stocks have a less than a shining reputation among precious metal investors. The expression ‘lame duck’ is appropriate for describing its performance this year. The NYSE Acra Gold BUGS Index (HUI), which includes the stars of the sector, currently stands at the year’s opening price. Perhaps it is for this reason that so many observers seem to relish at the idea of buying in. “Goldmines are unbeatably cheap”, scream the advertising slogans, “hopelessly undervalued”; “cheaper than ever”. Good luck with that one. The reality is that there is hardly any serious precious metal operator who hasn’t, at one time or another, already tried to exploit this apparent undervaluation.
Last week I was invited to dinner at China Tang, the restaurant located in the basement of the Dorchester Hotel in London´s Mayfair. To go in, one has to negotiate the hotel’s famous Promenade Bar. It was a Friday evening, so every one of the bar’s plump sofas overflowed with guests and the jazz trio was in full syncopation. My host and I had to squeeze up against a wall to make way for a rather corpulent middle-aged businessman coming from the opposite direction. With his arms, he ushered two attractive young women. Thanks to ridiculously high heels, they towered above him, and both wore blushingly short mini-skirts. My host looked across at me after they had passed.
I recently had the rare pleasure of being invited to lunch in the canteen of a major investment bank. By canteen standards, the food was very good. Although my chicken breast filet in breadcrumbs with chilli-sauce and basmati rice was but one of hundreds cooked that morning, it was delicious. On the way to the tray-return area, my host and I had to walk in front of huge display belonging to a fitness studio chain. A young woman dressed in the chain’s corporate colours, stepped out in front of us and asked in her friendliest voice: “Would you like to have your body fat measured?”
A recent US academic study that showed college students feeling “empowered” by student debt has baffled many observers. In an environment of over-indebtedness and increasing joblessness, one would have thought that a student loan would be perceived as a burden. But no, according to researchers at the University of Ohio, the greater the debt the higher college students’ self-esteem.
Opposites attract? Rubbish. When I look among the people I know, I rather have the impression that most have chosen partners that are just like themselves. In a couple of weeks, I will be attending the wedding of two chemistry PhDs. The evidence is not just anecdotal either.
Buy recommendations are easy; sell recommendations, less so. Quite how reluctant analysts are to give S&P 500 companies the thumbs-down was recently revealed in a Bloomberg study of 1,890 analysts. Only 5.1 percent of all ratings in the period January 2009 to April 2011 were ‘sells’. The explanation, according to the authors, was the stock market’s long-term tendency to rise: losers are simply much harder to identify.
I am always astounded by the number of investors who operate in the financial markets without loss limits. Of course, planning for a stop-loss in one’s strategy means admitting the prospect of a loss at the outset, and investors are understandably reluctant to do so.
There was a ridiculously long queue on the outside lane of the highway on my way home yesterday. It was only after I had driven alongside it for a few moments that I realised that all the cars were waiting to leave at my exit. By that time, of course, I had left the end of the queue far behind and was faced with the task of trying to squeeze into a line of impatient motorist, delayed by some as yet unknown incident beyond the exit ramp, in the middle of the rush-hour.
“…you chose the way of the hero. And they found you amusing for a while, the people of this city. But the one thing they love more than a hero is to see a hero fail…” – Green Goblin (Spiderman 2).
As internet sleuths set about scrutinising every paragraph of the doctoral dissertation of Germany’s popular defence minister for evidence of plagiarism, it seemed as if this comic-book wisdom was playing itself out once again. Karl-Theodor zu Guttenberg is at the centre of a scandal, accused of copying parts of his Ph.D. thesis. The discrepancies are so numerous that he has had to renounce his doctor title.
All financial market information – be it economic, technical, astronomical or astrological – is subject to the psychological needs of the one who perceives, processes and eventually employs it. This was the message I tried to bring across in a recent post and partial response to a Financial Times column. The journalist seemed convinced that investors’ belief in any given method of financial market analysis, however hare-brained, is enough to make the prediction a reality. Even once I pointed out that the human need to keep our beliefs in line with our behaviour takes precedence, he didn’t budge.
To be honest, I can’t stand Dr No (name changed). If there is one economist whose work I find overreaching, underwhelming and overrated, it is his. Despite this, my fellow blogger Unwonted Candour’s recent blog about Niall Ferguson prompted me to check the popularity or otherwise of Dr No in Twitter.
I saw Niall Ferguson being interviewed live from Davos last week. I like him. I have had a keen interest in his work over the years, so I thought it might be fun to ‘follow’ him with my new Twitter account (@UnwontedCandour). When I searched for his name and clicked, I got a real surprise: not because he had over 7000 followers already, but because he followed absolutely nobody…zero.
My goal was wonderful Bordeaux wine-tasting evening accompanied by a five-course gourmet dinner prepared a Michelin-starred chef. I had been drooling over the prospect of both since I booked the evening a few months earlier. I had carefully organised my other engagements, and artfully dodged the various cold bugs that had been flying around at home and at work, in order to have my calendar and my senses free for this evening of pure gastronomic indulgence.
The headlines in Tuesday’s Financial Times announced a story about Bernard Madoff’s bankruptcy trustee, Picard Irving, claiming $9bn from HSBC and various European banks. They are charged with allegedly ignoring several warnings about improprieties at Madoff’s funds and steering investments into them anyway.
While out shopping on Saturday, I ran into an old friend. I hadn’t seen him for years, so I overcame my aversion for Saturday afternoon coffee shops and invited him to join me for a cappuccino so we could discuss old times. He appeared a little despondent when the conversation turned to his family.
‘Due to current traffic conditions your route has been changed.’ These words, spoken in dulcet tones and with casual indifference by the in-car GPS system, are surely the scourge of motorists the world over. So it was once again this weekend The threat of a traffic jam on the route ahead caused me (and dozens of other vehicles armed with shark fin-shaped antenna) to leave the highway in the middle of nowhere.
The cognitive dissonance examples discussed in my last post reveal how surprisingly easy it is for people to change their beliefs and their subsequent behaviour simply as a result of an earlier action.
Contrary to intuition, it is actually easier to ‘believe’ if one has already acted in a way that is consistent with that belief.