The military’s powerful risk management technique

Reading Time: 9 minutes Think Like a Military Commander: The Red Team “One thing a person cannot do, no matter how rigorous his analysis, is draw up a list of thing that would never occur to him” – Thomas Schelling The commander had a serious problem. It was October 2010, a company of Paras had just arrived in southern … More The military’s powerful risk management technique

Five questions I would love to know the answer to (but don’t)

Reading Time: 2 minutes To follow on from When the Rules Change. Should investors use more leverage? Usually avoided with an allergic aversion, but CALPERs recently put the cat among the pigeons with their strategic decision to use 20% leverage to meet performance targets. Clearly it all depends on the terms of the leverage. But if a foundation or … More Five questions I would love to know the answer to (but don’t)

When the Rules Change

Reading Time: 6 minutes In the 1990’s competitive swimmers got very serious about swimming large distances underwater at the start of races. This culminated most famously in Russian Denis Pankratov winning the 100m butterfly at the Atlanta olympics by swimming more than half of the first length underwater and breaking the world record. Swimming’s governing body, FINA, decided understandably … More When the Rules Change

Apples and Squirrels – IRRs vs CAGR

Reading Time: 4 minutes The internal-rate-of-return is the traditional way of measuring returns in private markets (where cash-flows occur into and out of partnerships) but its shortcomings as a measure are one big reason to be wary of private markets performance, more on that here. It can be a bit like comparing apples with squirrels. One of several issues … More Apples and Squirrels – IRRs vs CAGR

A reason this equity rally might not be overdone

Reading Time: 5 minutes It’s a psychological fact that market falls are almost always painful. But stock market rallies can be almost as hated if they take a lot of people by surprise which is the same as saying the narratives in play against it are stronger or more prevalant than those supporting it. The bounce we’ve been in … More A reason this equity rally might not be overdone

Planning once you’ve been punched in the mouth – 3 more questions

Reading Time: 9 minutes No plan survives first contact with the enemy Herman Von Mutke the Elder During a speech in November 1957 Eisenhower told an anecdote about the maps used during U.S. military training. Maps of the Alsace-Lorraine area of Europe were used during instruction before World War I, but educational reformers decided that the location was not … More Planning once you’ve been punched in the mouth – 3 more questions