Investing

Veritat is a start-up seeking to leverage process and technology innovation to scale a business model that is typically saddled with persistent and burdensome variable costs.  If successful, Veritat will be able to deliver premium services to a mass audience.

Over the past several years, retail investors in the United States have been moving their money into bond funds at a pace not seen in 23 years.

The movement of money into fixed income funds by individual investors has outpaced contributions into equity funds for 30 straight months.

Bloomberg reports that Warrenn Buffett is shortening the duration on Berkshire Hathaway's fixed income holdings.

Twenty one percent of Berkshire's bond holdings are short duration and due in less than one year.  This represents a 3 percent increase from eighteen percent on March 31 of this year, and a 5 percent increase relative to the second quarter of 2009.

It is natural and tempting to assume that the capital market losses that occurred during the recent financial crisis represent a statistical outlier, a perfect storm, a rare, once in a century event—a black swan.

This is not at all the case.

An unsettling and eye-opening table in the current issue of the Financial Analysts Journal is reproduced below.

The consumer price index has fallen for two consecutive months: 0.2 percent in May and 0.1 percent in June.

The unemployment rate in the United States remains at a persistent 9.5 percent, and in July the U.S. shed 131,000 jobs.

Not exactly the type of news that supports a strong recovery or growth story.

In a basic sense, information theory measures the level of surprise in a message.

A highly informative message will come as a complete surprise and tell you something about which you had no previous knowledge.

Sounds pretty good, right—of what use is it to be told what you already know?  Well, there are actually cases where information is not so welcome.

I have a huge amount of sympathy for many of the people who are recently retired or close to retirement.

The Kelly Formula (also known as the Kelly System or Kelly Criterion) is a proportional betting system that optimizes a gambler’s bankroll.  In other words, it is a money management system that enables the maximum rate of compound wealth concurrent with zero chance of ruin.

A recent article in the Wall Street Journal discusses the damage that the financial crisis has rendered to the theoretical foundations of modern finance.

In particular, modern portfolio theory has come under heavy scrutiny over the past couple of years as a result of its non-relevance as a risk management tool during the financial crisis.

Goldman Sachs seems to have faired extraordinarily well through its proprietary trading activities over the past year as the S&P index has risen 73 percent.

Meanwhile, a Bloomberg National Poll conducted in March indicates that only three in ten respondents (that's right, 30 percent) say the value of their portolio has risen at all during the past year.