Monday links ditch the conventional wisdom

By Felix Salmon
May 5, 2009

Goldman arm shuns ratings with new credit strategy: Having an “investment-grade” mandate based on credit ratings is increasingly anachronistic.

How David Beats Goliath: Another classic Gladwell piece.

Schapiro’s FINRA Dumped Debt Early: Ryan Chittum finds a scoop buried in a Bloomberg snorer.

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Comments
3 comments so far

i completely disagree with the comment that the gladwell piece is “classic”.

how can it be said that a group of 12-year old girls (i.e. those that typically are playing for fun and/or just learning the game) aren’t the goliath’s when they not only have a former all-pro athelete as their coach, his ncaa playing daughter, and a coach that makes 12 YEAR OLD’s RUN ALL PRACTICE (this is insanity for 12 year olds)?

if anything, the other teams that were playing to “learn the game” and/or “have fun” vs. the “win at all costs” my coach is a “pscho” team were the david’s.

It is completely a classic Gladwell piece. Not necessarily a classic piece, but definitely classic Gladwell.

The whole thing rests on some guys interpretation of 10 times as powerful, and what a victory is. In Afghanistan the Soviets definitely won, until they lost.

And by what measure are two equally funded navies demonstrating a david v. goliath situation?

Again classic Gladwell.

Posted by zach | Report as abusive

Is the GSAM approach to ratings really the way forward? The problem with using market prices as a signal for any market action is that it tends to encourage herding by making any market movement self reinforcing. So if a company’s spread widened (or its stock price fell) then investors would react, say by selling its paper, which would then presumably lead to a further credit downgrade. There was a credit agency (it belonged to one of the big ones) that adopted this approach and was blamed for some of the death spirals (or near death spirals) in bank equities in the autumn of 2002 (Commerzbank, etc). So GSAM’s idea is neither original nor conspicuously successful..

Posted by Jonathan F | Report as abusive
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