Posts filed under “Really, really bad calls”

One Cheer for Fair Isaac

Sometimes we don’t know exactly how broken things are until after they get fixed.

Case in point: Fair Isaac Corp., the company that created the model used to calculate the scores underlying millions of consumer loan and credit decisions.

The New York Times described Fair Isaac’s formula as “one of the most widely used and influential credit scores.” The information it generates is used in the credit reports generated by Equifax, Experian and TransUnion, the three big companies that gather information on individuals and track their credit ratings. It is hard to understate the influence of FICO, as the company and its namesake scoring system are called.

Like all models, FICO has its flaws. Last week, the bad news was we learned how much more deeply flawed this model was than we previously understood. The good news is that Fair Isaac has been cajoled by the Consumer Financial Protection Bureau, an agency created by the Dodd-Frank Act, into applying more balance and fairness in its metrics.

There were two significant changes:   Continues here

 

 

Category: Credit, Economy, Really, really bad calls

The Idiots of San Diego County’s Pension Investment Committee

It’s a basic form of storytelling, used in countless books and movies: Two people, in similar circumstances, confronted by difficult choices. One does what is right, even if it seems like the harder choice. He fights through the many challenges, has moments of self-doubt and worry, before ultimately being rewarded. The other takes the easy…Read More

Category: Investing, Really, really bad calls

How Greenspan Became the ex-Maestro

On this day in 1987, Alan Greenspan became chairman of the Federal Reserve Board. This anniversary allows us to take a quick look at what followed over the next two decades. As it turned out, it was one of the most interesting and, to be blunt, weirdest tenures ever for a Fed chairman. This was…Read More

Category: Bailouts, Federal Reserve, Markets, Really, really bad calls

Why The Ukraine Headline Does Not Pass The Sherlock Holmes Test

I mentioned on Tuesday afternoon that I did not believe the market weakness was due to Ukraine Russia tensions. From Art Cashin, UBS head of floor trading, and a 5o-year veteran of the NYSE floor, expresses the sentiment much more eloquently than I:   One Of These Things Is Not Like The Other – Or…Read More

Category: Markets, Really, really bad calls

Last month, I spilled a considerable number of pixels explaining why Rupert Murdoch’s Time Warner bid had no significance to whether or not this is a market top. My short list included complaints of cherry picked data that somehow ignored most of Murdoch’s M&A activity over the past half century; a laughably small sample size…Read More

Category: Cognitive Foibles, Investing, Markets, Psychology, Really, really bad calls, Trading

Our Self-Inflicted Economic Wounds

In sports, all great competitors know that they have a choice, even when confronted with daunting, insurmountable odds. They can lay down and let the larger, stronger opponent run up the score. Or they can find a way to compete, to make a game of it. A good loss is a dignified way to show…Read More

Category: Investing, Really, really bad calls, Taxes and Policy

Welcome to the Muppet Economy

Slipping back into my regular routine is sometimes a challenge after a few days of traveling. The first day back in the markets — especially following a week like we had to end July and begin August — can be a bit of an adjustment. A few days away allows the accumulation of jaded skepticism…Read More

Category: Hedge Funds, Investing, Really, really bad calls

Beware those who are never, and can never be wrong.

Lately, I have been hear an interesting type of argument. It is a form of debate that is both disingenuous and dishonest. We will call this the “Can’t Lose Argument,” or CLA. Worse than confirmation bias, it is a money-losing exercise in narcissism. The CLA goes something like this: A data point will be mentioned,…Read More

Category: Psychology, Really, really bad calls

Well Hedged Predictions

click for original cartoon Source: Medium:

Category: Hedge Funds, Humor, Really, really bad calls, UnGuru

Free Lunch Over for Money-Market Funds

Of all the outrages endured during the financial crisis, perhaps the most perplexing involved money-market mutual funds. In an example of moral hazard writ large, this uninsured risk instrument — with $2.57 trillion in assets — somehow became too big to fail. Five years later, the Securities and Exchange Commission is finally taking steps to…Read More

Category: Mutual Funds, Really, really bad calls, Regulation