Before its collapse in 2008, Lehman Brothers had been one of the most prominent investment firms in the United States. But after 158 years in business, what caused it to fail so suddenly? In a word: complexity. Lehman had been involved in the securitization of mortgages, a process that resulted in [...]
The value of the VIX
Listen to the financial news, and you’ll often hear reference to “the VIX.” But what exactly is the VIX, and how important is it? The VIX index is intended to be a measure of investor sentiment. For that reason, it’s often referred to as the market’s “fear gauge.” How can investor sentiment be [...]
Art Heist
One spring day in 2022, an elderly woman entered Paris’s Picasso Museum to see a new exhibit. Among the items on display was a decorative blue jacket, which was positioned on a wall next to a portrait of Picasso. The woman liked the look of the jacket so she took it down from its hook, put it in [...]
Tariff Worries
Imagine taking dollar bills and inserting them into a shredder. This is how you might think about a concept economists call “deadweight loss.” As its name suggests, a deadweight loss occurs when there’s an irrevocable loss of economic output. Deadweight losses can occur under a variety of [...]
A Frequent Debate
In the world of personal finance, people debate about everything. Among these arguments is the question of how to measure risk. In general, partisans on this topic fall into one of two camps. In the first group are those who believe risk can be quantified and distilled down to a single number. [...]
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