Archive for May, 2012
A Mathematical Challenge to Obesity – NYTimes.com
Saturday, May 26th, 2012Rich Karlgaard: The Future Is More Than Facebook – WSJ.com
Friday, May 25th, 2012Bioengineers Make DNA Into a Living Flash Drive – IEEE Spectrum
Friday, May 25th, 2012L.A. OKs ban on plastic bags at checkout – latimes.com
Friday, May 25th, 2012http://www.latimes.com/news/local/la-me-0524-bag-ban-20120524,0,6541830.story would this work in a rainy city?
Men Should Skip Common Prostate Test, Panel Says – WSJ.com
Friday, May 25th, 2012http://online.wsj.com/article/SB10001424052702303610504577418440316431530.html
Seems to be all the more important to separate aggressive from indolent cancer
When Hedging Goes Awry – High & Low Finance – NYTimes.com
Monday, May 21st, 2012http://www.nytimes.com/2012/05/18/business/what-jpmorgan-didnt-learn-high-low-finance.html
Nice simple ex. of the anatomy of a bad trade
QT:”
It helps to understand what was in many ways the simplest — and seemingly among the surest — trades that got Long Term Capital into trouble. It was a bet that yields on the newly issued 30-year Treasury bond would converge with those of the 30-year bond issued three months earlier. When the bonds’ interest rates diverged, for what were surely temporary market reasons, the obvious trade was to buy the
higher-yielding Treasury and short the lower-yielding one. When they came together, that strategy would produce a certain — but small — profit.
But the profit would be large if the fund borrowed a lot of money to take a large position.
What happened then was that so many people put on the trade that even the large and liquid market in Treasury securities was strained. The divergence grew larger. If you could be sure the yields would eventually converge, the obvious course was to increase your bet, which is what Long Term did.
In the long run, that trade would have worked. But the margin calls mounted and it ran out of capital.
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