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Beta Risk
A friend at work recently asked me to look at some of the equities he holds in his portfolio. While I am a developer, I also have an MBA in Finance; I enjoy evaluating stocks and readily agreed. One of my friend's holdings is Wal-Mart (WMT), and I was a bit surprised to see that finance.yahoo.com listed WMT's Beta, which is a measure of a stock's risk relative to the market, as -0.14. It is uncommon to find stocks with negative Betas. Generally this means that the stock moves in the opposite direction ......

Posted On Friday, March 28, 2008 7:29 PM

Critique of Richard Bookstaber's, “A Demon of Our Own Design”
I just finished Richard Bookstaber's new book, A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation, and he makes some fair points. He asks a very important question in the book, in my opinion, “Why have economic cycles become less extreme while financial cycles have become more extreme?”. After all, our knowledge of financial instruments has increased over time, we use computer applications to help us hedge risk in better ways today, and we have better and more ......

Posted On Friday, January 11, 2008 6:27 PM

Liquidity is Undervalued ...
.... but not as much as Ranjan Badhuri implies in his article in allaboutalpha.com Ranjan writes about a game where liquidity pays: The game consists of a hat that contains 6 black balls and 4 white balls. The player picks balls from the hat and gains $1 for each white ball, and loses $1 for each black ball. The selection is done without replacement. At the end of each pick, the player may choose to stop or continue. The player has the right to refuse to play (i.e. not pick any balls at all). Given ......

Posted On Sunday, December 23, 2007 4:58 PM

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