cf, Eric Falkenstein
Posts tagged with finance
It’s true that the financial sector enjoyed disproportionate rents but it’s not true that the smartest and brightest work there. …[T]he place is littered with failed scientists. Worse, it’s littered with idiot savants. There are once in a while people working there who have trained for the job — Very good PhDs in finance and economics, for example, or good M&A lawyers, and they usually strike me as the ones who offer the best contributions to their organizations.
An Insider’s Perspective on the Basel Reforms (por stanfordbusiness)
Why is gold considered a hedge against fiat currency? If the monetary system collapsed — as in, the USD or the GBP or the JPY were no longer accepted in exchange for goods — are you absolutely sure people would accept Gold as a substitute?
This is not gold coins minted by a current government — it’s gold bars, gold bullion, or gold coins from some historical government (like, Spanish doubloons).
Gold, just exactly like fiat currency, is worth something just because other people think it will be worth something.
So if that’s the case — then why is gold considered a hedge against inflation?
I had a Managing Director tell me years ago … that the best strategy to succeed in investment banking was to keep your seat. Success would come, and success would go, but you could never enjoy the fruits of good luck or a heated market if you weren’t in a position where you could get paid. Young and naïve as I was, I remember finding this advice rather cynical and dispiriting. Surely you kept your seat and made lots of money for your firm because you were really good, because clients respected and trusted you, because you gave them great advice. Because you were better than anybody else. This was stupid on my part. He was right.
Nobody is indispensable in my industry. Nobody. Ever. For every hotshot trader or investment banker glorying in her run of luck and outsized compensation, there are twenty waiting in the wings who could do just as good a job. And a hundred who would be willing to work for half pay to prove they could do so too.
I’ve said it a billion times: in investment banking or sales and trading, you’re only as good as your last deal or your last trade. And your last deal or your last trade had much more to do with you being in the right place at the right time—being in the right seat—than with your charm, skill, or intelligence. And none of us know when the right deal is going to hit.
[T]here is nothing about your charm or intelligence that will distinguish you from the line of a hundred identical eager valedictorians waiting outside our hiring office. If anything, they’re probably hungrier and more naïve (hence more malleable) than you. Intelligence is table stakes.
The Epicurean Dealmaker (@EpicureanDeal)
Mega admire him for saying this.
John Moody is credited with initiating agency bond ratings, in the United States in 1909. Exactly three centuries earlier, in 1609, the Dutch revolutionised domestic and international finance by inventing the common stock — that of the Dutch East India Company — and founding a proto-central bank, the Wisselbank or Bank of Amsterdam.
…the Dutch … had … stable money, … banking … securities markets…. the leading economy of the seventeenth century. In 1688, the English … invited … William of Orange, to be their king. William brought … Dutch financiers … and in short order England, too, had all the key components of a modern financial system—the Bank of England, for example, was founded in 1694.
A century later … Alexander Hamilton … put in place … a similarly modern financial system during … 1789-1795. By 1795, the US, essentially a bankrupt country before 1789, had strong public finances, a stable dollar based on specie, a banking system, a central bank, and bond and stock markets in several cities. And just as the English had succeeded the Dutch in economic and financial leadership, the Americans went on within a century to succeed the English as the world’s pre-eminent national economy.