“Moral hazard is a natural concern for a policy which removes the main risk that hedge funds face when taking leveraged positions in cash-futures basis.” Kashyap, et al, March 2025 The above quote …| Convex Strategies
In last month’s Update, we pondered the question “what about the 40?”. This has long been a topic of our own discussions and clearly an issue that rose to the front of many people’s minds in the mo…| Convex Strategies
“Too often, the potential range of behavior of complex systems had to be guessed from a small set of data. When a system worked normally, staying within a narrow range of parameters, engineers made…| Convex Strategies
Nassim Taleb introduced the concept of Wittgenstein’s ruler in the first book of his Incerto series, “Fooled by Randomness: The Hidden Role of Chance in Life and in Markets”. He elaborated on the c…| Convex Strategies
“To ensure that a central bank does not prioritise the solvency of the sovereign over its primary mandate of price stability, the European treaties prohibit monetary state financing. In its public …| Convex Strategies
In our discussions last month about entropy, we introduced the term “arrow of time”. “Like with all things that live in non-ergodic, path dependent space, time dependence matters. Something that ma…| Convex Strategies
“Do you know the secret of life? One thing. Just one thing.” Curly Washburn. City Slickers, 1991. We find this a very useful, and accepted, philosophy when it comes to risk management of any activi…| Convex Strategies
Last month, in our February 2023 Update, “Sharpe World is Nefarious”, we posed this question: “If a bank loses money in accrual books and can continue to fund the losses with government guaranteed …| Convex Strategies