Is this the real price?
Is this just fantasy?
Financial landslide
No escape from reality
Open your eyes
And look at your buys and see.
I'm now a poor boy (poor boy)
High-yielding casualty
Because I bought it high, watched it blow
Rating high, value low
Any way the Fed goes
Doesn't really matter to me, to me
Mama - just killed my fund
Quoted CDO's instead
Pulled the trigger, now it's dead
Mama - I had just begun
These CDO's have blown it all away
Mama - oooh-hoo-ooo
I still wanna buy
I sometimes wish I'd never left Goldman at all.
(guitar solo)
~~~
I see a little silhouette of a Fed
Bernanke! Bernanke! Can you save the whole market?
Monolines and munis - very very frightening me!
Super senior, super senior
Super senior
The Chicago Tribune looks at how the NCAA tournament seeds have fared since 1985. I love the idea of a big tournament that invites a huge number of teams. It seems the most democratic, but there are some gaps in justice. For example, the #8 or #9 seed is really screwed because they always must play a #1 in the second round. Only 12 #8 or #9 teams have made it past the second round.
On the other hand, #12 is a pretty good seed. Those teams have a losing, but respectable record against the #5 seeds. A total of 14 number #12 seeds have made it past the second round.
My guess is that the seeds increase linearly while quality increases geometrically. The difference between a #12 and a #5 is probably about the same as a #1 and a #3.
If we wanted to be hard-headed, we could really make it a 12-team tournament and the results would be almost the exact
According to a recent report by S&P, market volatility is at a 70-year high. I think that’s merely going by 1% daily changes. Other measurements indicate that volatility has indeed risen, but it’s more accurate to say that volatility has returned to normal from an unusually calm period.
The VIX still hasn’t reached the heights of 1998 to 2002. The index has closed above 30 for a few times recently, but it did it fairly regularly a few years ago.
I think the effect of volatility on equity returns is not very strong. The current VIX seems to have an effect on the dispersion of returns, but not the direction.
Matthew Yglesias comments on the absurdity of John Meriwether blowing up, yet again. He includes this parable:
Imagine I find a kind of gambling machine somewhere that works kinda sorta like an enormous roulette wheel. It has 100,000 possible outcomes, and on 99,999 of those outcomes it pays off at a 1:1 ratio. But on the 100,000th outcome, you lose at a 1:300,000 ratio. Obviously, placing a bet on that machine would be foolish.
Not to me.
I’d lay down $1,000, let it roll for 20 spins and walk away a billionaire.
Addendum: Or there’s a very remote chance that I’d go in the roulette business. I'd be cool with either outcome.
