Barclays decided to sell its Investment Management group, Barclays Global Investors (BGI) to BlackRock. As part of the deal BlackRock is also getting iShares, the ETF arm of BGI. After the consolidation BlackRock will boast an asset base of $2.7 trillion, the largest with any single firm. Yet the combined BlackRock will only have 5%…

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Confessions of a risk manager is a classic article in Economist published around Aug 2007 before all the hell broke loose. This is my second reading of the article after it was published. Looking back now the risk manager’s concerns seem to be justified. CDOs sat uncomfortably between credit and market risk. In the end…

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How professional traders will behave under stress is a very intriguing topic. They were supposed to be taking reasonable decisions under stressful conditions of trading environment where speed is of the essence. The article points out that under extreme stress the analytical part of human brain switches off and the intuitive part of the brain…

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The search is on to find a replacement to efficient market hypothesis. Efficient market hypothesis in its strongest form indicates that the current price of an asset fully reflects all the available information about the asset. The theory came with 2 fundamental conclusions which have shaped the investment industry as it is today. The conclusion…

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This article on Credit-default swaps and bankruptcy highlights another instance of collateral damage of CDS (Credit Default Swaps) contracts to the economy. There was another detailed article in FT on the unintentional and negative outcomes of CDS contracts (which I will find and post again here). It is a commonly held assumption that when a…

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