Downward Trend Risk

“Will the trend continue?  Will the numbers keep dropping?  They’ve been getting worse — every day! — for several months now.  It’s already getting quite bad and it’s only getting worse.  What can we do to reverse the trend?”

I’m not talking about the stock market or the value of European Sovereign Debt.  I’m talking about the number of hours of daylight for people living in the Northern Hemisphere.  Historically, humans did a lot of [what we now consider] crazy things to reverse the very real and downward trend of diminishing sunlight through the fall months.  In other words, they did whatever they could to get the powers that be to increase the number of daylight hours.  Their actions – some gruesome and tragic – were based on their understanding of how the diminishing sunlight phenomenon worked.  Similarly, our actions today to reverse downward economic trends are based on our understanding of how markets work.  My claim is that the current understanding of our economic issues is not much better than the ancients’ understanding of the dynamics of planetary orbits and the Winter Solstice. Read more of this post

Biggest Risk

“The biggest risk is hiring the wrong person.”  That was my swift answer when asked to identify the most important risk facing hedge funds.  In that case, I was talking about hiring the wrong Chief Risk Officer — the person who sets the risk policies and monitors and enforces the risk management practices of an asset manager.  Little did I realize how applicable my advice was to my own firm.  At 25 people, it’s safe to argue that my firm is at material risk of hiring ‘the wrong person’ every time we make an offer.  It’s especially true for the person who is our equivalent of a ‘risk manager’ – the person who makes sure bugs don’t make it through the code and errors don’t end up in client’s reports: our head of Quality Assurance.  I can now with personal experience enhance my previous answer: the biggest risk facing any business is hiring the wrong person.

Two weeks ago we suddenly found ourselves needing to hire a new Head of Quality Assurance and my highest priority became writing a new job description.

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