In pursuit of uselessness

Last time I did a post on the philantrophy of Warren Buffet. In his conversations Buffet mentioned a philanthropist that no one else knew about and that was “Abraham Flexner”. I did some research on Flexner and learned that he truly did change the face of medicine in America, but Flexner also brought to light a philosophy on education reform that is very relevant today.

The Philanthropy of Warren Buffet

There's a video interview with Buffet from Forbes on philanthropy posted on YouTube. I jotted down some notes to share since the Oracle's philosophy is usually worth remembering:

On his kids:

“My kids went to public schools, and their kids went to public school and that's how it will be. I told them a long time ago that I'm not going to let you control my money. If you're not happy at 0.1% then you'll never be happy with more money. They know everything in my will; the fact that they know they will receive a significant amount of my wealth. They know that they have a responsibility towards it”

On why he outsources philanthropy:

“I don’t do a lot of philanthropic work. Why Bill and Melinda Gates foundation? Why outsource?
Well when my wife had a baby, I didn't deliver it[laughs]. Smith said that specialization is a good thing and it helps society. My wife is good with un-piling the money, and I'm good with piling it. When she died earlier, I had to make a decision, and Bill and Melinda Gates foundation was the choice. People who are younger and more energetic deserve that money because they can spend it effectively”

Antifragility: Things that gain from disorder

If you haven't heard about it already, Taleb, the guy behind the Black Swan theory(or as they claim) is out with another book. Although I wasn't intending on buying the book initially, his Saturday essay (WSJ) was what finally convinced me. Then of course Felix Salmon came out with a review along with Matt Ridley , and I just couldn't wait for it to come in.

A lesson from Roman History

Last week I posted about the history of the Drachma and Greece.
Thought it would be interesting to share the history of the Roman empire and its currency. The following is based on a speech by Joseph R. Peden given in 2009.

Scholars have devoted a great deal of energy to examining the problem of how the Roman Empire lasted so long? And did it decline, or was it simply transformed into something else?

Monetary policy always serves, even if it serves badly, the perceived needs of the rulers of the state. If it also happens to enhance the prosperity and progress of the masses of the people, that is a secondary benefit; but its first aim is to serve the needs of the rulers, not the ruled.

A brief history of the Drachma

In 1827, when the modern Greek State was created, money transactions were carried
out mainly in Turkish coins, as well as in foreign currencies such as the Spanish Distilo. There was no Greek currency until 1828.
A national monetary system, based on silver, was established for the first time in 1828. This silver standard prevailed until 1832. In 1831, the currency’s convertibility into silver was suspended, and paper money was created to finance the budget deficits.

Sell-side outperforms buy-side?

I found this working paper very interesting on the HBS working knowledge website so thought I'd share.
The paper mentions that total $ spending is not too far apart on both sides:
"In 2006, U.S. and U.K. investment firms spent $7.7 billion on buy-side research versus $7.1 billion on sell-side research. Further, as we discuss below, there are important differences between buy- and sell-side analysts that are likely to affect their behavior and performance."

Interestingly, the author uses bonus payouts to gauge the performance:

A tragic hero of financial engineering

Most of you here are familiar with the Black-Scholes formula since it’s imbued in every possible textbook of corporate finance 101 under the sections of option pricing. The infamous black-scholes-merton formula was created by Nobel laureates (now unfortunately also blamed for the credit crunch) who used advanced calculus to build a closed form solutions on how to price options which are widely traded on the CBOE today. But most of you don’t know that the science behind options was created over 70 years before it came to practice by a man name Bachelier.

Gallatin: A forgotten financier[part 2]

This post is a continuation to last weeks:
A forgotten Financier

There are two major achievements that deserve mention. First, there is Gallatin’s singular success in his pursuit of debt reduction. Gallatin took advantage of prosperous and relatively peaceful times to reduce the public debt of the emerging United States. The second is Gallatin’s efforts is the way in which he reinforced the financial institutions set up by Alexander Hamilton and made skillful use of them.

Gallatin: A forgotten financier

A lot of you who have an interest in economist history have probably heard of Alexander Hamilton, the first Treasury Secretary appointed by Washington, but many of you have probably never heard of Albert Gallatin and today I just wanted to pay homage to him.

Volatility of an Impossible Object

Christopher Cole of Artemis Capital Management has an excellent new piece of research out there and I just wanted to highlight some parts out of it today. He specifically targets traditional empirical views on things and mentions how the efficient frontier is no longer a valuable tool, and how fear and safety are both weak to live by in perspective: