Tag Archiv: commitment

The Fed Has the Final Word

8. July 2013
Microphone and analyzer

I guess there were not many central bank watchers who expected the latest declaration by ECB chief Mario Draghi. At last week’s press conference, one inattentive journalist was so engrossed in his pre-prepared question as to why the ECB did NOT engage in the kind of forward guidance recently adopted by the new Bank of England governor, he had completed the missed the part where Draghi did precisely that.

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A Bellyful of Good Intentions

14. September 2012

Recently on the beach, I overheard the solemn pledge of a generously-proportioned Austrian. He adjusted his unflatteringly tight bathing trunks, leaned over to his equally corpulent companion, and promised: “By the time we go on skiing holiday, I swear I’m going to lose 10 kilos.” She didn’t seem to take the oath too seriously, as she simply shrugged her shoulders and went back to her magazine. I only briefly observed the scene while passing yet, strangely, I can’t seem to get it out of my head.

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More Skin in the Game

18. July 2012
Basketball hände

A personal investment in a fund increases the fund managers’ psychological commitment to the investment decision. Commitment is not be confused with conviction. Unlike the latter, the former is rarely a good thing. Commitment can be thought of as the psychological glue that binds decision-makers to their decisions. When you hear someone described as being ‘married to their position’, what is being discussed is commitment.

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Skin in the Game

17. July 2012
Basketball hände

I confess to having been deeply sceptical when I read an appeal last week by a boss of a fund management firm (Schnider,Walter & Kollegen)  to make it an obligation for fund managers to invest personally in the funds they manage. For Mr Walter, the notion that having some ‘skin in the game’ makes for better investment decision-making is so self-evident it barely needs defending.

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Not Really Sunk with Hollande

8. May 2012

Before the results of French elections were known much ink was used to speculate how the election of socialist Francois Hollande would lead to the shift in Franco- German axis on the issue of growth and austerity. Essentially Chancellor Merkel and President Sarkozy have invested a lot of political capital and time in the pro-austerity strategy with an aim of solving the crisis.  So despite an increasing number of economic observers having now recognised that austerity in a static growth environment can only be recessionary, it has been difficult for political leaders them to change their stance.

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Selective ECB Decision-Making

7. September 2011

Another month, another ECB rate decision. This time we know that the Governing Council will review its inflation outlook and, as a consequence, its current rate-tightening path. A number of analysts, including one Nobel laureate, believe the Bank should take back the two hikes already implemented since April

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Has Gold Lost its Gleam?

26. August 2011

Full disclosure: I have a long-position in gold. Presumably just like many of my compatriots, I keep gold for security – not for speculation – in case something goes horribly wrong in the eurozone or out in the world.

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Fatal Free Lunch

22. August 2011

Japan and Switzerland presently suffer from massive capital inflows, and their respective currencies have appreciated significantly over the past 18 months. Interestingly, commentators have highlighted the rally in the Swiss franc as an indicator of capital outflows from the funding-plagued eurozone, while ignoring the fact that

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Secret Saviour

15. August 2011

The equity markets have finally begun to calm down after two weeks of crisis. The Fed’s announcement to hold rates exceptionally low until at least mid-2013 didn’t have all that much of a positive effect; especially while the official FOMC statement also contained the word ‘likely’.

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Time Bandits

3. June 2011

At last, German legislation is finally addressing a plague that costs everyone a lot time and money: the fee-based telephone queue. I never understood why one is subjected to a fiddly question-answer menu only to again explain the reason for the call when once connected with a service representative.

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Stop-Loss Aversion

10. May 2011

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.

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Paper Trading

2. May 2011

Although my fondness for digital versions of bar-room games is no secret, gaming apps are rare on my smartphone. I couldn’t help downloading a new game recently, though; it is so easy and, more importantly, free. But it wasn’t pinball or billiards; it was the casino classic, roulette. This is gambling without risk.  I started with $1,000 of virtual pocket money and over the last couple of weeks I’ve watched how my virtual wealth has steadily grown.  My cash balance is now just short of $40,000, and I play at the table limit of $250 a spin.

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Why Mr Trichet, Why?

13. April 2011

The first statement by the ECB president in the press conference that followed last Thursday’s rate-setting meeting was to express his sympathy for the victims of the Japanese earthquake and tsunami. It seemed a little stale for many viewers, coming as it did some three weeks after the event, but it was Mr Trichet’s very first opportunity to do so.  It highlighted just how much has taken place in the world since the last meeting, most notably the Fukushima disaster.

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Divorce, But Love in the Meantime

12. April 2011

“We like to do things that are unexpected: anyone can extend [a contract] after matches have been won, but it is a good sign for the public to endorse a coach even after a defeat”. This was the testimony of Karl-Heinz Rummenigge, chairman of Bayern Munich, in an interview with the German newspaper Bild Zeitung – but not in its April 11th edition; this sound-bite was published last September. Generously, the board had decided to extend to 2012 the contract of the then-cherished Bayern coach, Louis van Gaal, even though a decision was not due. In the meantime, the tale has taken an ugly twist.

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3. March 2011

Often when I speak on the theme of Behavioural Finance the topic turns to herd behaviour, perhaps because it awakens such vivid and testy notions in people.  One automatically envisions a herd of bleating sheep

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Carlos’ Curve

16. February 2011

I met recently an old friend of mine, an investment banker. He looked dreadful. I hardly dared to ask him what was up. ‘The proverbial has hit the fan,’ he told me. ‘Two out of our five-man group will get the chop.’ I feigned interest as he recounted his career to date. Yet I remember when Carlos joined the bank as a new graduate. It was at a seminar I held for trainees during the bank’s ‘boot camp’. I recalled a fresh young man, full of drive and ambition. He hung on every word of his new boss, who described the unimaginable challenges that awaited them and the undreamed-of rewards.

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Self-Fulfilling Destruction 2

11. February 2011

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.

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Woman Power (At Last)

2. February 2011

The idea of a more representative number of women in leading business positions is one that most people can empathise with. But as soon as the discussion moves to quotas in order to encourage this representation, the faces start to get longer. This is where the German government is right now.

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A Resolution Revolution

4. January 2011

It’s the fourth day of the New Year. How is the healthier eating thing going? Are you drinking less alcohol yet? Doing some sport? Losing some weight? Do you have plans for spending more time with the family?

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20. December 2010

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.

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Pure Speculation

9. December 2010

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.

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About S.

12. November 2010

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.

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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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Fidelity: What Gang Members and Couples Share

10. September 2010

A 25 year-old man is knocked unconscious and beaten for more than six minutes by nine members of a street gang. The assault, part of the gang’s initiation requirement known as the ‘jump in’, determines whether an initiate has the ‘heart’, mentally and physically, to roll with its members. The ‘act of love’ amounts to a beating of fists, kicks and stomps that sometimes leaves the initiate physically impaired or dead

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Trading advice

3. September 2010

An analyst is often asked if he throws his own money after the advice he gives to others in the financial markets. When one says no most querents are left feeling a little bewildered, if not indignant, by the answer. Their reply is always the same: why should they be persuaded when the analyst doesn’t even trust his own tips. Some expert…

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The Pyongyang approach to fund management

26. August 2010

Fifa, world football’s governing body, has ended an investigation as to whether North Korea’s national team was sanctioned after its poor performance in this year’s World Cup tournament. A few weeks after the world championship games, news circulated that the team had been submitted to six hours of public humiliation and that the trainer was ‘rumoured’ to have been banished from the Worker’s Party and sent to break rocks at a construction site.

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Weber didn’t fold

23. August 2010

Commentators blasted Axel Weber for changing his opinion on the ECB’s current emergency policy of supplying unlimited funds in weekly, monthly, and three-month refinancing operations. Mr Weber was accused not only of morphing from a hawk to a dove in one swoop, some critics charged that the Bundesbank president had folded under pressure to better his chances of securing the next ECB presidency.

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