2/ Value, momentum: +1 defensive, +1 offensive (if attacking, you get +1 and subtract 1 from your partner's dice roll; vice versa if you are defending)
Quality, trend: +2 defensive
Carry: +2 offensive
Growth, market beta: +1 offensive, -1 defensive
Leverage: 2x gains & losses
3/ As in standard risk, draw a 'power up' card if you end a turn with more territories than when you started. Up to five cards can be hoarded and used when you are either attacking or defending. They can be used during that entire encounter and then discarded.
4/ Quant Risk could be used to explore ideas about diversification, leverage, and position sizing.
It would also be nice to have a finance game that doesn't teach players to constantly overleverage and double down (*cough* Monopoly, Cashflow). boardgamegeek.com/boardgame/6552…
1/ Short Squeezes and Their Consequences (Schultz)
"Short squeezes are not unusual for the hardest-to-borrow stocks, and re-establishing short positions is expensive. If a short seller does not reinitiate after a squeeze, he misses out on large returns."
2/ "There is overwhelming evidence in the literature that stocks with binding short sale constraints, as measured by high borrowing fees or short interest, earn poor returns. The abnormal returns suggest that there may also be significant risks to short selling."
3/ "For some stocks, it can be difficult to locate shares to borrow. It might seem that shares could still be borrowed easily when utilization is just 70%, but share lending is a fragmented market. A potential borrower’s normal sources of shares may have no shares to loan."
1/ Smartest Guys in the Room: The Amazing Rise And Scandalous Fall of Enron (Bethany McLean, Peter Elkind)
Skilling: “Enron was a great company.”
"Indeed, that’s how it seemed until the moment it filed the largest bankruptcy claim in U.S. history." (p.29) amazon.com/Smartest-Guys-…
2/ "Fortune magazine named Enron “America’s most innovative company” six years running. Henry Kissinger & James Baker were on its lobbying payroll. Nobel laureate Nelson Mandela came to Houston to receive the Enron Prize. The U.S. president called Enron chairman Lay “Kenny Boy.”
3/ "Enron had transformed the way gas & electricity flowed across the U.S. It bankrolled audacious projects around the globe: state-of-the-art power plants in third world countries, a pipeline slicing through an endangered Brazilian forest, a steel mill on the coast of Thailand.
1/ A Wandering Mind is an Unhappy Mind (Killingsworth, Gilbert)
"A human mind is a wandering mind; a wandering mind is an unhappy mind. The ability to think about what is not presently happening is a cognitive achievement that comes at an emotional cost." wjh-www.harvard.edu/~dtg/KILLINGSW…
2/ " “Stimulus-independent thought” or “mind wandering” appears to be the brain’s default mode and allows people to learn, reason, and plan.
"Unfortunately, collecting real-time reports as people go about their daily lives is cumbersome and expensive.
3/ "Such experience sampling has rarely been used to investigate the relationship between mind wandering and happiness and has always been limited to very small samples.
"We solved this problem by developing aWeb application for the iPhone that contacts people at random moments.
2/ "During the Great Inflation era (1965-1982), inflation annualized at 6.5%. While comparisons to our current situation are tempting, the structure of the global economy and monetary, fiscal, energy, and labor policies are dramatically different."
3/ "Inflation is a ‘tax’ on revenues, not profits.
"High taxes in high-inflation regimes can push the effective tax rate above 100%, leading corporations to rack up expenses to reduce pre-tax profits.
"Current corporate tax rates should not exacerbate inflationary forces."
1/ Modern Endowment Story: A Ubiquitous United States Equity Factor (Ennis)
"Endowments' overwhelming exposure to the U.S. equity market over the most recent 5–7 years raises important questions regarding risk tolerance and diversification."
2/ Over the most recent six years, the NACUBO equal-weighted composite of large endowments has had a beta to the benchmark of 1.0 and R² of .998. This is a dazzlingly tight fit, considering that the independent variables are restricted to fully investable, broad market indexes."
3/ "The U.S. equity market risk premium is embedded in the principal asset classes that endowments employ. (I make no attempt to adjust for the return smoothing characteristic of private markets. The correlations and betas would no doubt be greater if I had done so.)"