Notes from Howard's Sabbatical from Working. The name comes from a 1998 lunch conversation. Someone asked if everything man knew was on the web. I answered "no" and off the top of my head said "Fidel Castro's favorite color". About every 6-12 months I've searched for this. It doesn't show up in the first 50 Google results (this blog is finally first for that search), AskJeeves says it's: red.
Sunday, October 26, 2008
Beyond the Dow
The Boston Globe today had an article explaining some market indexes beyond the Dow, like the TED, VIX and BDI.
4 comments:
Anonymous
said...
The Globe's VIX description didn't really describe how it was calculated while all the others did. So I googled to find more and now I know why the description is so vague. See http://www.cboe.com/micro/vix/vixwhite.pdf page 3 for the actual computation. The latest VIX formula seems to have been primarily created by the physicist/goldman sachs VP Kresimir Demeterfi. There is also a FAQ at the end that gives an intuitive description as to the "why" it works in layman terms.
I should have waited for your post and the Boston Globe. I just posted some of these indices because I wanted to keep track of some of the new (to me) ones related to the current crisis, TED spread is one of my new favorites.
Is it bad to think that the one good thing to the crisis is that perhaps some people will come out of it with a better understanding of or at least be more aware of these measures of our financial systems.
The more I understand the less confidence I have in the "experts" (Greenspan et al) that have created our current financial system. Had I understood credit default swaps (CDS) earlier I might have recognized it legalized gambling. But I doubt I would have used them to become filthy rich by betting against the real estate bubble.
I agree. I have a friend who doesn't enter my oscar pool each year saying he only gambles in well regulated markets. The problem was, the real estate back derivatives and CSDs were not regulated at all. So there was this whole shadow banking system that wasn't regulated because the Greenspans and others thought the banks could regulate themselves because of capitalistic market forces. Which really shows a lack of understanding.
4 comments:
The Globe's VIX description didn't really describe how it was calculated while all the others did. So I googled to find more and now I know why the description is so vague. See http://www.cboe.com/micro/vix/vixwhite.pdf page 3 for the actual computation. The latest VIX formula seems to have been primarily created by the physicist/goldman sachs VP Kresimir Demeterfi. There is also a FAQ at the end that gives an intuitive description as to the "why" it works in layman terms.
I should have waited for your post and the Boston Globe. I just posted some of these indices because I wanted to keep track of some of the new (to me) ones related to the current crisis, TED spread is one of my new favorites.
Is it bad to think that the one good thing to the crisis is that perhaps some people will come out of it with a better understanding of or at least be more aware of these measures of our financial systems.
The more I understand the less confidence I have in the "experts" (Greenspan et al) that have created our current financial system. Had I understood credit default swaps (CDS) earlier I might have recognized it legalized gambling. But I doubt I would have used them to become filthy rich by betting against the real estate bubble.
I agree. I have a friend who doesn't enter my oscar pool each year saying he only gambles in well regulated markets. The problem was, the real estate back derivatives and CSDs were not regulated at all. So there was this whole shadow banking system that wasn't regulated because the Greenspans and others thought the banks could regulate themselves because of capitalistic market forces. Which really shows a lack of understanding.
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