In an interview, John C. Bogle, president of Vanguard's Bogle Financial Markets Research Center, talked about the global market crisis and his outlook for the future of the global economy. According to Bogle, there is always an element of repetition, and this present crisis has that. Investors refuse to concede that certain firms or financial instruments have very high risk. Therefore, people t…
In his testimony before the Committee on Financial Services of the US House of Representatives, University of Chicago professor Steven N. Kaplan makes three principal arguments in defense of executive compensation. First, Kaplan argues that "during the past 15 years, the period in which CEO pay has been criticized, the US economy has done extremely well." Of course that's true. But corporate pr…
Investors need to be aware that rare events with an extreme impact that, afterwards, we think we could have predicted?in short, black swans?happen in the markets. Those who are trying to measure risk in the financial markets need to carefully distinguish risk, with its probabilities, from uncertainty, which cannot be measured. We have become increasingly vulnerable to black swans because our fi…