Graham’s first goal was never to make money—it was to avoid losing any.
A year earlier, no company had been accorded more faith than Enron; by late November, none was trusted less. And so, a gasping gurgle, a desperate SOS: Enron, the emblem of free markets, the champion...
But after Kapor took Merton's finance course, he decided that quantitative finance was less a science than a faith - a doctrine for ideologues blinded by the power of the model. It appealed to intelle...
America’s abandonment of the gold standard would have shocked the founders, who took for granted that money had to be more than mere paper. More than anything, going off gold (which occurred in stages...
The great man is he who in the midst of the crowd keeps with perfect sweetness the independence of solitude.
Lawrence Summers, now the U.S. Treasury secretary , told The Wall Street Journal after the crash, The efficient market hypothesis is the most remarkable error in the history of economic theory.
Backed by their models, they felt more certain than others did - almost invincible. Given enough time, given enough capital, the young geniuses from academe felt they could do no wrong
The risk models developed by private firms, whether hedge funds, rating agencies, or banks, are not reliable guides to the future. Even when these models are applied by government regulators, their ap...
Prophesy as much as you like, but always hedge. - Oliver Wendell Holmes, 1861
No stigma was attached; second acts on Wall Street are as common as they are in politics. Perhaps one cycle, be it an election cycle or an economic cycle, is the extent of the public's memory.
Glass’s nature was to fret. He was intensely agitated by the pressure from bankers for a centralized scheme and worried that bankers had gotten to Wilson (a suspicion, of course, that was entirely cor...
As Keynes observed, there cannot be liquidity for the community as a whole. The mistake is in thinking that markets have a duty to stay liquid or that buyers will always be present to accommodate sell...
As Keyes noted, one bet soundly considered is preferable to many poorly understood.
A chief attraction of the real bills theory was that it took decisions regarding the money supply out of human hands. John Carlisle, Treasury secretary under Cleveland, maintained that issuing notes i...
With traders scrambling to pay back debts, Neal Soss, an economist at Credit Suisse First Boston, explained to the Journal, You don't sell what you should. You sell what you can. By leveraging one sec...
Warburg hesitated before daring to reply. Your bank is so big and so powerful, Mr. Stillman, that when the next panic comes, you will wish your responsibilities were smaller.
If Wall Street is to learn just one lesson from the Long-Term debacle, it should be that. The next time a Merton proposes an elegant model to manage risks and foretell odds, the next time a computer w...
His talent sprang from his unrivaled independence of mind and ability to focus on his work and shut out the world, yet those same qualities exacted a toll.
For men who prided themselves on being disciples of reason, their drive to live on the edge seemd inexplicable, unless they believed that becoming the richest would certify them as also being the smar...
And in the late summer of 1998, the bond-trading crowd was extremely fearful, especially of risky credits. The professors hadn't modeled this. They had programmed the market for a cold predictability...