Click for larger image. Hat tip, Statistical Modelling...

QuantLogic is mitosizing! Going forward I'm splitting off all the Federal Reserve related stuff and posting them at a new blog: The Talking Fed. Here's the RSS feed. The first two posts are up now: Getting up to speed... Anatomy of a Recession (Ed Leamer at Jackson Hole) Topics related to quantitative finance will stay here at QuantLogic.

Ok, this is completely off topic, but I can alway use a good laugh. Make a note of what's playing when you first start to smile. I'll bet the music that does it is from your high school years. Thanks to Brad for the link.

It's rare that I come across something that strikes me as both absolutely true, but generally under-appreciated. This quote by Charlie Munger (Warren Buffet's partner) is one of them: I have said that in my whole life, I've known no wise person over a broad subject matter area who didn't read all the time--none, zero. Now I know all kinds of shrewd people who by staying within a narrow area can

I took the CFA level III exam this past weekend. Now that I’ve taken all three exams, I have some thoughts on the experience. First, the curriculum is worth studying. I initially signed up for the exams after looking through a level 1 study guide and thinking that I wanted to know the material better. In fact, I think it’s fair to say that anyone working in investment management should know

This reminds me of what it's like to convince a non-quantitative boss to devote more capital to quantitative trading strategies: So for aspiring quants and quant-traders, here are some hard-learned words of wisdom: never take a job working for someone who knows less math than you do.

No, I'm not dead, but I have been incredibly busy, leaving me almost no time for thoughtful blogging. So until I get more time to indulge in some more deep blog nogging, here are a few of my favorite fonts of nutrients for your noggin: Blogs: Cato Daily Commentary The Council on Foreign Relations Energy Outlook Podcasts: Bloomberg On The Economy Tech Nation with Moira Gunn WNYC's Leonard

The FOMC raised rates 25 bps, as expected, but the statement emphasized several factors that are working to restrain growth and inflation, notably the lagged effect of previous interest rate hikes and ongoing productivity gains, which are keeping growth is unit labor costs down. Fed funds futures are now pricing in slightly lower odds of additional tightening, but are still expecting another

While browsing around the Wilmott Forums, I stumbled upon a really excellent article by Emanuel Derman about how to get a quant job in finance (pdf). It's packed with good advice: I grew up believing, and still believe, that quantitative finance is in essence a multidisciplinary enterprise. To be effective, you must learn finance, mathematics and programming. The latter is critical because most

Brad DeLong explains the recent market turmoil, monetary policy and Ben Bernanke in just 202 seconds during his morning coffee. Watch it twice, then watch it again, then forward to your friends. It's good stuff. And if you want to get a more detailed picture of what Brad's talking about, read these two Bernanke speeches from 2004: The Logic of Monetary Policy and Central Bank Talk and

I don't usually repost other blog posts here, preferring instead to simply syndicate the ones I like in my QLReadingList feed, but occasionally I read something that resonates so strongly that I wish I had written it: Econbrowser: Hawk or dove? The pundits continue to be frustrated in their efforts to pigeonhole the Federal Reserve Chair. There is an interesting tabular summary from Liz

With the relentless rise in oil prices over the past three years, that question has been asked a lot, with surprisingly little agreement on the answer and a lot of muddle thinking in the analyses. That’s perhaps understandable, since the issue is a complex one. But when you’re trying to tackle a complex problem, it helps to start by asking the right question, and “Are we running out of oil?” is

... and hit's the bullseye. Raghuram Rajan, the IMF's research director, gave a speech today about the recent massive selloff in worldwide stocks and other risky assets. The picture he paints of hedge funds ain't pretty, but it sure is accurate: Monetary Policy and Incentives, by Raghuram G. Rajan In recent days, we have seen a retrenchment of investors from a broad range of risky assets,

Alpha magazine just published its list of highest paid Hedge fund managers: 1. James Simons $1.5 billion Renaissance Technologies 2. Boone Pickens $1.4 billion BP Capital Management 3. George Soros $840 million Soros Fund Management 4. Steven Cohen $550 million SAC Capital Advisors 5. Paul Tudor Jones $500 million Tudor Investment 6. Edward Lampert $425 million ESL

Top Hedge Fund Earners of 2005, according to Trader Monthly Magazine: 1. T.Boone Pickens - estimated 2005 earnings $1.5bn + 2. Stevie Cohen, SAC Capital Advisers - $1bn + 3. James Simons, Renaissance Technologies Corp. - $900m - $1bn 4. Paul Tudor Jones, Tudor Investment Corp. - $800m - $900m =5. Stephen Feinberg, Cerberus Capital Management - $500 - $600m =5. Bruce Kovner, Caxton Associates -

From Brad DeLong's Foreign Affairs review of John Kenneth Galbraith: His Life, His Politics, His Economics, by Richard Parker: To start a revolution, you need a doctrine that has three qualities: it can be summarized in a single sentence, it provides the young with an excuse for ignoring their elders, and it tells the young what they can do to further the revolution. He's actually referring only

It's already three weeks into 2006, but I only today started noticing all the blogs posting prediction for 2006 (e.g. Calculated Risk). So here are some of my own: 1. Housing prices will be flat in 2006 (+/- 2%), with only small declines on the coasts. 2. U.S. real GDP will grow by 2.5%-3%, led largely by a continuation in consumer spending, and not by a CapEx boom. 3. The Fed stops at 4.5%.

Very hawkish in tone again, even though they aren't saying anything they haven't said repeatedly in speeches since the last meeting. The key statement change is "further policy firming may yet be needed to address inflation risks." Expect a lot more Fed speeches that emphasize inflation risks and energy price pass-through. Nevertheless, unless we see significant increases in unit labor costs,

"The slowing of the growth of real GDP in the fourth quarter of 2005 seems largely to have reflected temporary or special factors. Economic growth has rebounded strongly in the current quarter but appears likely to moderate to a more sustainable pace. As yet, the run-up in the prices of energy and other commodities appears to have had only a modest effect on core inflation, ongoing productivity

In 1975, Fairbanks Alaska was the richest city in the U.S. Back then, its average income was almost twice as high as Stamford, CT, which usually tops the list. Last week, PBS's American Experience began airing a fascinating documentary on just what made Fairbanks so very rich back then. The boom was fueled by the construction of the massive Alaska Pipeline: There were only two police