Felix Salmon

How Goldman Sachs protects itself from a hundred-year storm

October 29, 2012

(Picture from Stephen Foley)

“When it comes to natural disasters,” says Rob Cox today, “there‚Äôs no such thing as too much preparation.” He then goes on to extend the analogy:

Who is to blame for Ina Drew’s downfall?

October 3, 2012

Susan Dominus has a big 7,500-word NYT Magazine feature on the rise and fall of Ina Drew, featuring a couple of bland quotes from Jamie Dimon but nothing — nothing on the record, at least — from Drew herself. (We’re told explicitly about four different people who declined to comment when approached by Dominus, including “London Whale” Bruno Iksil and his boss Achilles Macris; Drew is not one of the four.)

When investment banks hire risk-takers

September 15, 2011

Matt Taibbi is quite right about the $2 billion of rogue-trading losses at UBS. Basically, investment banks hire for risk-takers; they shouldn’t be surprised when this kind of thing happens.

How monoculture is like triple-A CDOs

March 3, 2010

Tom Laskawy, of Beyond Green, writes asking for a bit more detail about this bit of my locavorism article:

Measuring total risk

February 7, 2010

Peter Conti-Brown has a new paper proposing the creation of what he calls a Fat Tail Risk Metric, or FTRM. The paper itself is flawed, and the details of how it’s constructed would need to be reworked from scratch. But conceptually, the FTRM I think is a good idea. Here’s Conti-Brown’s abstract:

When Goldman Sachs hates marking to market

February 3, 2010

The most ridiculous sentence I’ve read today comes from Goldman Sachs, protesting against proposals that money-market funds should be marked to market. But first let’s remember what Goldman CEO Lloyd Blankfein has to say about marking to market:

Crisis chart of the day: The correlation between severity and probability

January 14, 2010

The World Economic Forum has released its annual Global Risks report, which kicks off with this chart:

John Paulson’s high-risk hubris

January 14, 2010

Malcom Gladwell is no particular expert on financial markets. But he has said, according to Moe Tkacik, that of all the people he has interviewed, he most identifies with Nassim Nicholas Taleb — in a 7,800-word profile which explains just how hard it is to invest in markets when your strategy involves losing money every day and waiting for a tail event.

The risk-averse rich

December 15, 2009

What’s the correlation between wealth and risk appetite? I suspect that it’s somewhat bell-shaped: when you’re very poor you can’t afford to take any risks, while if you’re entering the middle classes you often feel that you have to take risks, especially with your retirement assets, if you’re going to have a chance of maintaining your standard of living once you stop working. If you already have more money than you’ll ever spend, however, then you don’t need to take those kind of risks any more, and you start becoming much more conservative again — see for instance the way in which Suze Orman is invested only in wrapped munis.