February 28, 2007

Cavalcade of Risk, February 28th edition

We're honoured to host this edition of the Cavalcade of Risk blog carnival. In light of yesterday's stock market meltdown, we feel risk analysis is quite timely and we've decided to split the submissions up into different categories namely
  • Investor & Economic Risk,
  • Political & Regulatory Risk, and
  • Personal & Professional Risk
Investor & Economic

Made to Be Great submits: "Risk Taking - Living life to the fullest", differentiating between risk taking and irresponsible behavior:
Irresponsible people take risks without ever paying attention to the dangers the risk brings, and take action out of “impulse” instead of preparation and careful thought. For example, suppose someone gets a suggestion from a friend to invest his money on a certain stock, and lets suppose this person doesn’t really have any investing experience, then out of sheer excitement he goes out and invests all of his money on that stock hoping he will have a great return. This wouldn’t be risk taking, this would just be acting irresponsibly. If this man would have taken the time to study the friends suggestion properly and with the help of capable people, and determined that it would be best to invest only a portion of his money, he would still be taking a risk while investing, but he couldn’t possibly be accused of acting irresponsibly. with some sound advice
The Digerati Life warns investors to "Know Thyself" by analyzing your "investor profile":
Investing is a way to make your money work for you so that you can take calculated risks for the promise of a better reward relative to simply stuffing your money in a hidden nook somewhere in your house. The more you know about risk and how it can affect you and your situation, the better off you will be. Bottom-line: there is a law that states that your returns are directly proportional to the risk you take.
Israeli Speculator submits a definition of Arbitrage financing
Arbitrage is basically in simple terms “making money out of nothing”. There is no risk involved. But sometimes people abuse this term or are not aware of a hidden risk.
Over at Calculated Risk, a WSJ report is analyzed, concerning sub-prime lenders "less than stellar risk assessment on loans", which many are blaming for the current volatile conditions on the stock market:
Slowly but surely, people are starting to get it, and slowly but surely, I am starting to think that the tipping point in credit -- via a subprime-generated shambles in CDO (collateralized debt obligation) land -- is closer than anybody imagines.
Political & Regulatory

Over at Sox First, former Citigroup CEO Sandy Weill argues that unregulated hedge funds should be willing to "open their books to regulators":
There is a lot of leverage in the business which means they don't just use the money they have but borrow money, so they use multiples of their own capital. The risk is what the size of the positions are and what happens in those positions if all of a sudden something outside impacts on the market to change it or if the liquidity begins to dry out. That changes the ability to get in and out of markets .
Lynch Ryan at Workers Comp blog highlights the way different states approach workers compensation:
there are 51 US jurisdictions involved in workers’ compensation, each with a different law. That’s 51 opportunities to get it right, or 51 opportunities to get it wrong.
Roth & Company Tax Updates looks at the Bush administration's health insurance proposals with a rather favorable assessment:
The proposal will almost certainly encourage some people who currently lack insurance, particularly middle-income families, to get it. And the core of the new proposal is not biased towards the provision of favored forms of insurance (e.g., high deductible policies) over other forms of insurance that could reduce spending (e.g., managed care or plans with higher copayments).
Political Calculations examines the French tax and social security system:
What do a seemingly unending stream of car burnings and the French Social Security program have in common? The answer may be that the more Renaults, Peugeots and Citroëns that go up in flames, the better the finances for France's social safety net becomes.
Personal & Professional

  • In honour of Black History Month, Black Male Appreciation submits Black male teens and their efforts to follow positive role models. The article highlights The Kappa League from Tuscaloosa, an organization reaching out to Black male youth who, many say, are looking for models beyond the thug image prevalent in rap music and other entertainment media.
Being bossy is easy; being a good boss is hard work. Being a great boss takes a combination of talent, emotional intelligence, and wisdom.
Alas, much easier said than done Rita!

  • New York attorney Eric Turkewitz submits Like A Good Neighbor, State Farm Runs Away, arguing that the insurance giant is "baling out of the Mississippi market. Their motto, 'Like a good neighbor, State Farm is there,' apparently no longer applies in that storm damaged state."
  • Matthew Paulson wonders whether Payday Loans Ever a Good Idea arguing that finance companies and banks have now figured out viable ways to loan money to people who won’t always pay the money back; but is advising that is not always such a good idea.

That's it for this weeks edition of the Cavalcade. We want to especially thank Henry Stern of the Award Winning Insureblog for giving us the opportunity to host, and of course all those who submitted posts and made this a truly great experience!

1 comment:

hgstern said...

What a terrific job...Thank you for hosting!!