I am dusting off a classic test for risk intuition. If you remember the test from years past, it will be nice to reminisce. If not, take the test now to assess your intuition and look at risk in a new way.
Tag Archives | volatility
The Case for Incoherence
Imagine you are stranded on a desert island. For fresh water there are three natural springs, but it is possible one or more have been poisoned. To minimize your risk, what is your optimal strategy for drinking from the springs? You might: select one of the three springs at random and drink exclusively from it, [...]
Market Makers’ Dilemma
One of my clients deals in a specialty commodity. They source the commodity, process it, and then sell it in local markets around the world. In some local markets, my client is a two-bit player. In others, they are the market maker. In those markets, they largely set the price of that commodity. Unlike a [...]
Peter Bernstein’s Evolving Thinking On Risk
Peter Bernstein is an elder statesman of finance. He served time in the rough-and-tumble world of portfolio management. He was the first editor of the Journal of Portfolio Management, and his diverse writings have made him somewhat the chronicler of twentieth century finance. He is best known for his book Capital Ideas: The Improbable Origins [...]