Synopses & Reviews
Kenneth A. Posner spent close to two decades as a Wall Street analyst, tracking the so-called specialty finance sector, which included controversial companies such as Countrywide, Fannie Mae, Freddie Mac, CIT, and MasterCard--many of which were caught in the subprime mortgage and capital markets crisis of 2007. While extreme volatility is nothing new in finance, the recent downturn caught many off guard, indicating that the traditional approach to decision making had let them down. Introducing a new framework for handling and evaluating extreme risk, Posner draws on years of experience to show how decision makers can best cope with the Black Swans of our time.
Posner's shrewd assessment combines the classic fundamental research approach of Benjamin Graham and David Dodd with more recent developments in cognitive science, computational theory, and quantitative finance. He outlines a probabilistic approach to decision making that involves forecasting across a range of scenarios, and he explains how to balance confidence, react accurately to fast-breaking information, overcome information overload, zero in on the critical issues, penetrate the information asymmetry shielding corporate executives, and integrate the power of human intuition with sophisticated analytics. Emphasizing the computational resources we already have at our disposal--our computers and our minds--Posner offers a new track to decision making for analysts, investors, traders, corporate executives, risk managers, regulators, policymakers, journalists, and anyone who faces a world of extreme volatility.
Synopsis
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& mdash;all with the goal of making better financial decisions. Emphasizing the computational resources we already have at our disposal& mdash;our computers and our minds& mdash;Posner shows us how to navigate the next phase of our financial recovery.