Most of all would rather be lucky than smart, but how can you tell? Interesting article from a Legg Mason manager. Untangling Skill and Luck

Worthwhile Article on Yesterday's Stock Market Action

The Day There Were No Bids

Whoops

Some insights from yesterday:

The linkage between exchanges breaks down very quickly.

Algorithmic trading works well...until it doesn't.

High frequency and quant trading dominate US (and developed markets') activity in the
equity markets. Their trading has at a minimum, much more of a technical focus than
traditional, fundamentally oriented managers.

Liquidity driven markets, markets that detach from economic reality, always end
poorly. I am not saying this market overall is that kind of a market, but clearly it has
attracted a large number partcipants buying and selling stocks who are not driven by valuation.

Hit the Road

I found this article in today's WSJ sort of repugnant. Many of the country's municpalities and state governments have been facing tax shortfalls at a time when major infrastructure repair programs were needed. To help shoulder the burden and to help implement the Federal stimulus program, the federal government has picked up a decent portion of the tab of the Build America program. Wall Street investment banks have received fees north of $1 billion for their part in helping sell these bonds to institutional investors!
Acoording to the article, the IBanks feel their fees have been justified due to the difficulty in selling the bonds, as well as their more active involvement in management of these projects. Goldman Sachs has taken out ads in Politico speaking about being "proud to play a role in rebuilding our nation's infrastructure."

I would like to see bipartisan support for these fees being lower than traditional municipal bonds, not higher. No one would suggest that the underwritings should be done for free. but certainly some responsibility for today's economic troubles rest at the feet of America's banks and brokers. It is in the interest of everyone for these fees to be appropriate in the context of today's financial climate. If Wall Street still doesn't understand this, regulators need to make sure the lesson is understood.

Build America Pays Off on Wall Street-WSJ

My Chess Club Can Beat Your Chess Club

Just got done reading The Quants by Scott Patterson. A bit breathless in spots, but does a decent job in showing how mathematical hubris almost brought down Wall Street and the US financial system. Here's the link to the book on Amazon.