Saturday, December 27, 2014

Countering Black Swans

Rare events can have profound implications
There is little doubt that we now live in a world of Black Swans – unexpected events that can suddenly change everything. The term “Black Swan” was coined by Nassim Nicholas Taleb in his landmark book: The Black Swan. Taleb argues that random unknown events now drive much of what happens in the world today and because of reckless thinking on the part of our institutions, coupled with global networks and complexity, we can all expect a lot more black swan events in the future. All you have to do is look back over the last ten or twenty years to see it – 9/11, Financial Crisis, and Turmoil in Egypt are all black swan events.  

Can Wall Street Learn Something from Islamic Finance

Islamic Finance injects a moral code into transactions
Increasingly people have lost faith in our financial institutions. We are seeing major fluctuations in currencies and commodity prices (such as a 50% drop in oil in 2014). Additionally, government leaders are unwilling to put serious guidelines in how markets should work for the benefit for all.

We now live in a world where over 60% of all stock trading is done by computers in nano-seconds. We now live in a world where the Federal Reserve engages in something called “quantitative easing” which positively impacts Wall Street more than Main Street.