[Grovenet] A new look at an old Constitutional Amendment

[David Morelli]

The underlying assumption of the formula is that the "the market  
knows the value of the product and the market price will reflect the  
risk".  This is close to the standard conservative mantra for a wide  
variety of issues.

The market doesn't know.  It guesses.  And some guesses about risk  
are very expensive mistakes.

Caution can be a useful practice.

David

On Feb 24, 2009, at 10:25 AM, Katie Allnutt wrote:

> While I was dinking around with Bob's article I ran across this one  
> too.
> Not related to the constitution but more aimed at understanding the
> economic mess that has been building over the last several months.
> It helps with vocabulary like tranching, collateralized debt
> obligations, credit default swaps, etc.  We should all understand
> both the constitution and the economy better.
>
> One good article deserves another....
>
> http://www.wired.com/print/techbiz/it/magazine/17-03/wp_quant
>
> or
>
> http://tinyurl.com/au8f4p
>
> Katie