Max Mednik
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Readings and musings

Lessons Learned from Week 9 of Fall Quarter

12/4/2011

1 Comment

 
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Ethics
  • Duties of fiduciary
  • Loyalty (no self-dealing)
  • Care (reasonable study, judgment)
  • Candor/disclosure (have to tell what you know, can't hold back for yourself)
  • Foreign Corrupt Practices Act
  • Bribes vs. grease payments
  • Must be authorized and booked properly
  • Professional codes of ethics: CYA codes (not about morality)
  • Business experience, societal norms, values
  • Trust, integrity, fairness, caring/compassion
  • Normative ethics (I'm ok, you're ok, based on society at time)
  • Kantien ethics (rigid, rules-based for what required for being considered human race; never can lie)
  • Utilitarianism (greatest good for greatest number; leaves some people out)
  • Social justice
  • Religion
  • Insurance value of average American dying in airplane (based on average age, earnings power): $1.2 million
  • Insurance value of average Portuguese fisherman dying in airplane (based on average age, earnings power): $60K
  • Is one worth more than other?
  • 4 ways of reading Dante
  • Surface level: plot
  • Allegorical: myths and heroes
  • Moral: custom and law
  • Deep: spiritual, ethical
Behavioral finance
  • Trading biases or How not to lose money in financial markets
  • People tend to sell their winners too quickly and hold on to losers too long.
  • Experts overconfident too; attribute success to effort not luck
  • People take too much credit for their own success.
  • Don't confuse brains with a bull market.
  • Overconfidence leads to excessive trading.
  • Trading is hazardous to your wealth.
  • High portfolio turnover => low return
  • Transaction fees kill.
  • Women have less turnover in portfolios and do better than men.
  • Marital status doesn't matter.
  • Marriage helps make men better traders, but hurts women.
  • Psychology: men need marriage, but not very good for women
  • Single man has nothing to do (an idle man is the devil's workshop)
  • Study of online trading
  • People performed well before going online
  • Accelerate trading after going online
  • Trade more speculatively after going online
  • Perform poorly after going online
  • Self-attribution bias: take too much credit for successes, little blame for failures
  • Illusion of knowledge (knowing vs. knowing the relevant, useful issues)
  • Illusion of control (people prefer to roll their own dice)
  • Individuals prefer stocks w/ high skewness and volatility (institutions prefer opposite)
  • People with more speeding tickets and greater overconfidence in personality profile trade more.
Doing deals
  • Oaktree: Real estate and CMBS deals
  • Focus more on risk than reward in this type of asset management
  • Don't lose others' money
  • When market up, want average results
  • When market down, want to beat others by not going down as much
  • Responsibility to others, relationship
  • Some properties can fetch ego buyers.
  • Don't always destroy competitors; help them and be "go to" option that others turn to in time of need.
1 Comment
Florida Beach Wedding link
7/16/2012 02:57:53 pm

Wow! I really loved reading your blog. It was very well written and simple to understand. Unlike additional blogs I have read.

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