This year saw the passing of two giants of the investment world. The first was Harry Markowitz, who in the 1950s developed a concept now known as Modern Portfolio Theory. Markowitz’s key insight was one that today we view as so fundamental that it’s easy to take it for granted: Markowitz was the [...]
Stein’s Law
A favorite concept in economics is Stein’s law. It states that, “if something cannot go on forever, it will stop.” It’s named for Herbert Stein, an economist who was influential in the 1970s and served as chair of the president’s Council of Economic Advisors. Stein first made this comment when he [...]
Which way the wind is blowing
This winter, do you expect it to be warmer in Minneapolis or in Miami? This isn’t meant to be a trick question. We’d probably all agree it will be warmer in Miami. But what if I asked you to predict the precise temperature in either city on January 1st. This is a much more difficult question. In [...]
Measure for measure
As the old saying goes, there are lies, damned lies and statistics. And then there is investment performance, which may deserve a category of its own. This topic came to mind recently when I saw a press release heralding the accomplishments of a retired non-profit executive. Among the claims: [...]
Stanislaw Ulam
In January of 1946, a man named Stanislaw Ulam found himself confined to a hospital bed, having suffered an encephalitis attack. A brilliant scientist and a veteran of the Manhattan Project, Ulam wasn't the type to sit idly while he recuperated. Instead, after playing innumerable games of solitaire [...]
