Personal Money Management 101 Blog

Black Swan review

On its Spring 2007 release Nassim Taleb’s The Black Swan was hailed as a thought-provoking and radical masterpiece. In the light of recent world events it can be considered prophetic following Taleb’s chapter 14 warning:

” I spoke about globalization… it is here, but it is not all for the good: it creates interlocking fragility, while reducing volatility and giving the appearance of stability… We have never lived before under the threat of a global collapse. Financial institutions have been merging into a smaller number of very large banks. Almost all banks are now interrelated… when one falls they all fall.” Read the rest of this entry »

“I’ve just inherited $20,000, what should I do with it?”

Of course, this question is impossible to answer without a lot more information about the questioner.

We all have goals – stated or subconscious – and identifying these is the first step in financial (and life) planning. Note the use of goals in the plural. We all have numerous, sometimes competing, goals. It’s quite likely you’ve never actually formally identified your goals; so taking time to analyze what’s driving you can be a valuable exercise. Read the rest of this entry »

by Steve Selengut

One of the great things about being a professional investor is the opportunity one has to apply his or her long-term experience to the investment environment that is unfolding (or coming unglued) in the present.

If nothing else, most successful investors develop a consistent strategy that allows them to take advantage of short-term changes and the opportunities that they create in a somewhat unemotional manner. You can always tell a “newbie” by a “let’s see how you do for a year” comment, or a “what’s hot” question.

Read the rest of this entry »

by Steve Selengut

The Working Capital Model (WCM) is an historically new methodology, but with roots deeply imbedded in the building blocks of capitalism, and financial psychology— if there actually is such a thing.

The earliest forms of capitalism sprung from ancient Roman mercantilism, which involved the production of goods and their distribution to people or countries around the Mediterranean. Read the rest of this entry »

Nassim Nicholas Taleb

The Hidden Role of Chance in Life and in the Markets

Tempted to entrust your hard-earned dollars to Wall Street’s latest fund management genius? Think twice, warns Taleb, the manager’s success is more likely down to luck than judgement. In fact luck, or rather randomness, plays much more of a role in our seemingly orderly world than we might care to imagine.

Trader and financial mathematician Taleb describes himself as a skeptical empiricist; basically meaning he takes nothing at face value, relentlessly questioning everything dressed as fact. Following his prediction of predicted the current financial meltdown, The Sunday Times called him the “hottest thinker in the world”. According to Wikipedia, Taleb is said to have made a fortune from the crisis. Read the rest of this entry »