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  • Waiting on Investments

    Retail investment requires two kinds of trust:  one monetary and the other, a trust in expectations. Together, their demand for fulfillment is that the investor must wait. Necessarily, the investor spends a lot of time waiting: waiting for a good market entry point; waiting for a target exit point; waiting for market trends to turn; [...]

  • Titanic Flaw in Reality Testing

    Reporting on Davos, Simon Johnson presents a grim picture of CEO reality.  What is even grimmer is that it lines up squarely with Gillian Tett’s report last week on the need, among CEO’s for therapeutic bonding, with Davos as group therapy. The incursion of clinical psychology into the world of corporate finance is insidious. It [...]

  • The Essential Psychology Within Financial Investment

    We know corporations are legally bound to maximize self-interest. What about investors? The act of investment is in “laying out money or capital in an enterprise with the expectation of profit” ( wordnet.princeton.edu/perl/webwn). Investment in financial markets occurs through the purchase of financial instruments. Profit is expected is through some combination of interest, income, and [...]

  • Financial Regression in the Service of Banking

    Very rarely does Finance so precisely mirror Psychoanalysis. Yet, this week, the financial world both in the UK and in the US achieved a milestone: the peculiar mixture of positively valued and negatively valued assets upon the balance sheets of our quickly failing banks— an unsteady blend which might be seen as “ambivalent”—is to be [...]

  • What Banks Know

    Some years ago, before Depression panic gripped the world, I had the opportunity to consult with several members of the banking industry. Each was involved in an obscure area of work, destined to become headline news within a few years. And whether discussing complex derivative trades or the structuring of collateralized debt obligation tranches, each [...]

  • Mister Market

    Mr Market, goes the common wisdom, suffers from bipolar disorder. We join him in his enthusiasms—momentarily gratifying our greed and desire as we attempt to amplify wealth; and then our stomachs tighten and grip as his mood swing plummets to strip our dreams. We say the losses are on “paper”; but bitterly remember that the [...]

  • Observations on Getting it Done

    Here is the story: attempting to conserve funds in the economic downturn, a downwardly mobile “middle class” neighbor withdrew her car from its accustomed parking space in a garage a block or so away. In Manhattan, this little bit of economic conservation is worth about $6000 after-tax dollars, annually. It was simple: either the car [...]

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