The efficient frontier for financial modelling

There is a trade off between the explanatory powers of a model and its complexity: the more a model explains, the more complex it will be. Would you disagree with that? Before you answer, let me make a claim: Mathematics is about revealing patterns that simplify. The mathematician's work is actually based on producing simplicity, … Continue reading The efficient frontier for financial modelling →

Understanding the credit crisis

In an earlier post (see here) I put a link to an online book that explains all the main concepts of economics in terms of the classic 'Island Economy'. If you think about it in theoretical terms, this book is a 'proof' that the Island Economy is a sufficiently rich model into which many important … Continue reading Understanding the credit crisis →

Economics book with cartoons, online for free!

I'm on a roll with Economics, getting through books and articles at a tremendous rate. But this one is a gem. Written by Irwin Schiff (read about him on Wikipedia do), it's available here as a free-to-download pdf. His sons Peter & Andrew have published their own version of the story which reflects historical events more … Continue reading Economics book with cartoons, online for free! →

Navigating NewWorldEconomics.com

I mentioned in a previous post that I had come across Nathan Lewis's archive of his articles in NewWorldEconomics.com. Fascinating stuff, but with so much to read, you need a system of attack. Mine is here below. It's a bit rough, lacks a unifying form, but I think it is worth getting out there already. I'll … Continue reading Navigating NewWorldEconomics.com →

Favourite quotes

When you first log-in to Bloomberg in the morning you are greeted by their quote of the day. Here is a list I will occasionally update with favourites. "All men who have achieved great things have been great dreamers." Orisen Swett Marden "Acquire inner peace and a multitude will find their salvation near you." Catherine … Continue reading Favourite quotes →

How to link to sections in Wikipedia

A very short post to explain a quick trick I discovered for linking to a specific section in a Wikipedia page. This works for me in Chrome running on Windows XP. Visit the section you want to link to. Ctrl+C the name of the section (ie the section title in the page) you want to … Continue reading How to link to sections in Wikipedia →

Irving Fisher’s debt-deflation theory

In an effort to make sense of the current chaos, I am ploughing through a collection of readings on economics, and came across a brilliant article by Irving Fisher. Written in 1933, it lays out his (educated) intuition on the causes and dynamics of debt-deflation cycles. Frankly it is so fresh it could have been … Continue reading Irving Fisher’s debt-deflation theory →

Making neat Excel charts (quickly)

If, like me, you spend a lot of time building spreadsheets with charts, you will want to make sure they are all lined up and neat. This is how I do it. You can get this whole process done in seconds with a bit of practice :-). Select the range of cells that you want … Continue reading Making neat Excel charts (quickly) →

How do banks work?

Nathan Lewis runs a blog called New World Economics, and back in 2008 he wrote a series of 7 articles which do a very good job of explaining how a bank works. It is well worth a read. Click here to see the series. Note that it was written in early 2008, which was about … Continue reading How do banks work? →

Project finance funding: a simple Excel model

Financing of infrastructure projects is a hot topic at the moment. Penny Lynch has kindly made a simple cashflow Excel model available which shows the key components (equity vs debt) of project finance funding. It's called Simple IRR and DCF Calculations, you'll find it on this page here (along with lots of other helpful spreadsheets).