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Stalking the Black Swan: Research and Decision-Making in a World of Extreme Volatility

by Kenneth A Posner Columbia University Press
Pub Date:
03/2010
ISBN:
9780231150484
Format:
Hbk 288 pages
Price:
AU$54.99 NZ$56.52
Product Status: Available in Approx 9 days
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Kenneth A. Posner spent more than a decade tracking the volatile stock sector known as ''specialty finance.'' A research analyst with Morgan Stanley, Posner monitored markets known for surprise shifts in volatility, including the stocks of controversial credit card companies and mortgage lenders, some of whom catalyzed our recent financial downturn. Extreme volatility is not a new issue in finance, but as our current crisis proves, decision making remains a challenge.

Bringing his experience to bear on this issue, Posner describes a set of research strategies that can help investors and other decision makers better anticipate and react to the ''Black Swans'' that all-too-frequently rock the markets. Drawing from the classic, fundamental research heritage of Benjamin Graham and David Dodd, as well as more recent developments in cognitive science and the world of quants, Posner outlines a pragmatic approach to establishing more accurate forecasts, thinking in probabilities, balancing confidence, handling information overload, harnessing sophisticated computer analytics, and even interviewing corporate executives - all with the goal of making better financial decisions. Emphasizing the computational resources we already have at our disposal - our computers and our minds - Posner shows us how to navigate the next phase of our financial recovery.

Acknowledgments
Introduction
PART I: Uncertainty
1. Forecasting in Extreme Environments
2. Thinking in Probabilities
3. The Balance Between Overconfidence and Underconfidence, and the Special Risk of Complex Modeling
PART II: Information
4. Fighting Information Overload with Strategy
5. Making Decisions in Real Time: How to React to New Information Without Falling Victim to Cognitive Dissonance
6. Mitigating Information Asymmetry
PART III: Analysis and Judgment
7. Mapping from Simple Ideas to Complex Analysis
8. The Power and Pitfalls of Monte Carlo Modeling
9. Judgment
Notes
Index

Kenneth A. Posner is a financial services industry analyst and a fifteen-year veteran of Morgan Stanley, where he served as managing director and senior research analyst and where his work received high rankings from Institutional Investor and Greenwich Associates. He earned his MBA from the University of Chicago Graduate School of Business and holds the Certified Public Accountant, Chartered Financial Analyst, and Financial Risk Manager designations. Visit the author at www.stalkingtheblackswan.com.