A Quote by Niall Ferguson
I think the rise of quantitative econometrics and a highly mathematical approach to risk management was the obverse of a decline in interest in financial history.
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Given the central role of effective, firmwide risk management in maintaining strong financial institutions, it is clear that supervisors must redouble their efforts to help organizations improve their risk-management practices...We are also considering the need for additional or revised supervisory guidance regarding various aspects of risk management, including further emphasis on the need for an enterprise-wide perspective when assessing risk.
The four most dangerous words in finance are 'this time is different.' Thanks to this masterpiece by Carmen Reinhart at the University of Maryland and Kenneth Rogoff of Harvard, no one can doubt this again. . . . The authors have put an immense amount of work into collecting the data financial institutions needed if they were to have any chance of making quantitative risk management work.
If you have an approach that makes money, then money management can make the difference between success and failure... ... I try to be conservative in my risk management. I want to make sure I'll be around to play tomorrow. Risk control is essential.
Stronger regulation and supervision aimed at problems with underwriting practices and lenders' risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates.
Econometrics may be defined as the quantitative analysis of actual economic phenomena based on the concurrent development of theory and observation, related by appropriate methods of inference.
The Fed contributed to the financial crisis, keeping interest rates too low for too long. I give them credit for responding and stabilizing the economy and the financial sector during the crisis. But then they tried to do too much with quantitative easing that went on forever, just dramatically exploding their balance sheets.
We necessarily operate in an environment in which there's a great deal of uncertainty. In such an environment, it makes sense to use a risk-management approach to identify and avoid the big mistakes. That's one reason I favor a cautious approach.
There is a simple way of avoiding excess risk-taking by the managers of our financial institutions. It is to make it a crime ... had a crime for reckless management of a financial institution been on the books, Northern Rock and RBS would not have blown up.
We humans have a wide range of abilities that help us perceive and analyze mathematical content. We perceive abstract notions not just through seeing but also by hearing, by feeling, by our sense of body motion and position. Our geometric and spatial skills are highly trainable, just as in other high-performance activities. In mathematics we can use the modules of our minds in flexible ways - even metaphorically. A whole-mind approach to mathematical thinking is vastly more effective than the common approach that manipulates only symbols.
Our entire approach to the banking and financial services business is risk-adjusted returns. We believe that in most parts of the world, and including pockets in India, banking tends to mis-price risk.
There has always been interest in certain phases and aspects of history - military history is a perennial bestseller, the Civil War, that sort of thing. But I think that there is a lot of interest in historical biography and what's generally called narrative history: history as story-telling.
Most of the time, your risk management works. With a systemic event such as the recent shocks following the collapse of Lehman Brothers, obviously the risk-management system of any one bank appears, after the fact, to be incomplete. We ended up where banks couldn't liquidate their risk, and the system tended to freeze up.
What people recognize is that there's a fear that the United States is in an unstoppable decline. They see the rise of China, the rise of India, the rise of the Soviet Union and our loss militarily going forward.
Real investment risk is measured not by the percent that a stock may decline in price in relation to the general market in a given period, but by the danger of a loss of quality and earnings power through economic changes or deterioration in management.
Since 2008 you've had the largest bond market rally in history, as the Federal Reserve flooded the economy with quantitative easing to drive down interest rates. Driving down the interest rates creates a boom in the stock market, and also the real estate market. The resulting capital gains not treated as income.
I think risk is important. I don't care if it's a great financial risk or a physical risk. You only get out of something what you put into it and the fact that you are willing to risk something means that you are going to get a lot more out of it.
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