There is probably money to be made in analyzing the foibles of money managers, to create new strategies by taking on the opposite of what they are doing.What errors do most money managers make today?Chasing performanceOver-diversificationBenchmarking / Hugging the indexOver-tradingRelying too heavily on earnings growthAnalyzing the income statement onlyRefusing to analyze industriesBuy newsy companiesRelying on the sell-sideTrusting management too much Let me handle these...

Your morning financial links, expertly curated.

We had another round of debate about fixing the banking system at the Financial Services Club this week (read Part One here).  This time it was the turn of the shareholder, media and industry to air their views, ably represented by: David O'Hara, Shareholder and Activist Investor, Blackthorn Focus; Nick Kochan, Author and Journalist; and Brian Mairs, Strategic Communications, the British Banker's Association. David kicked things off with a palpable sense of anger at the losses...

Welcome to the rest of 2013. I certainly hope you've made some money in the first five months of the year (not hard to have [...]

The Bank of England made history over the autumn and earlier this year. Its newly created Financial Policy Committee announced that the big UK banks were short of capital to protect themselves against potential future losses and then quantified that gap as £25bn that needed to be raised by the end of this year. Never before had any British regulator, let alone the Bank of England, been so public and explicit about...

Things we're reading today include ... Bank predicts Pingit demand surge One in five customers to switch bank accounts U.S. Justice Department tells lawmakers no bank is too big to jail Bank of England as confused as the rest of us about state of UK economy Brussels to tighten rules on bank bailouts Firms STILL starved of loans, says Bank Lloyds and RBS given capital 'all-clear' VIDEO: Swiss dilemma over bank secrecy  

Big show tonight, starting with an interview with Jon Hilsenrath re: today's Fed testimony and minutes. Enjoy! Source: CNBC

An efficient method to price bonds with optional sinking feature is
presented. Such instruments equip their issuer with the option (but not the
obligation) to redeem parts of the notional prior to maturity, therefore the
future cash flows are random. In a one-factor model for the issuer's default
intensity we show that the pricing algorithm can be formulated as a Markov
Decision Process, which is both accurate and quick. The method is demonstrated
using a 1.5-factor credit-equity model which...

We consider the Fractionally Integrated Exponential Generalized
Autoregressive Conditional Heteroskedasticity process, denoted by
FIEGARCH(p,d,q), introduced by Bollerslev and Mikkelsen (1996). We present a
simulated study regarding the estimation of the risk measure $VaR_p$ on
FIEGARCH processes. We consider the distribution function of the portfolio
log-returns (univariate case) and the multivariate distribution function of the
risk-factor changes (multivariate case). We also compare the...

Under the Dodd-Frank Act, and the implementing rules now approved by the CFTC, trades that aren't "large notional swaps" are to be reported more rapidly and thoroughly than those that are. This of course makes the definition of a large notional swap (a/k/a a block trade) an important matter.