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Quote by Richard Thaler

“The reason is they failed to learned the primary lesson we should have learned from when Long Term Capital Management went belly up ten years ago. That is, investments that seem uncorrelated can be correlated simply because we're interested in it.”

Quote by Richard Thaler

Author

Richard Thaler, born on September 12, 1945, is an American economist renowned for his contributions to behavioral economics. Professor Thaler is a faculty member at the University of Chicago and is considered one of the pioneers of behavioral finance. His research focuses on how human behavior influences economic decisions and how these behaviors conflict with traditional economic theories. more

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“LTCM lost money when Russia defaulted on a certain class of bonds, and then they had other investments like on the spread between two different kinds of shares of Royal Dutch Shell Oil Company. Now that seems completely unrelated to Russian bonds. But they were related because other hedge funds saw similar discrepancies and they were all making similar bets.”

Kind Two Different Seems Certain Lost Company Class Saws Share Investment Spread Oil Russia Related Fund Different Kinds Shells Royal Dutch Oil Companies Discrepancies Hedge Fund Lost Money

Author:Richard Thaler

“As secretary of state you can go out in a helmet if you want to. Even in Switzerland in front of reporters.”

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“"Red Dawn" was a movie made in 1984 I think about World War III. If you have not seen it and plan on watching it, you want to close your eye and cover your ears but not really. You can figure it out.”

Ifs Thinking World Want Made War Eye Plans Figures Red Ears Dawn War Of The Worlds Over You World War Ii World War I Red Dawn

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“So the world is much more correlated than we give credit to. And so we see more of what Nassim Taleb calls "black swan events" - rare events happen more often than they should because the world is more correlated.”

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Author:Richard Thaler

“I think one lesson we have to learn is that there's a lot more risk than we're giving credit to, a lot more what economist calls systematic risk.”

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“David Petraeus, the best known American general of his generation. After commanding the American war effort in both Iraq and Afghanistan, he was serving as CIA director when he stepped down suddenly following revelations that he`d had an extramarital affair. That same investigation that turned up evidence of the affair also eventually turned up evidence that General. Petraeus had passed classified information to his mistress.”

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Author:Rachel Maddow

“I think we also have learned the lesson that we have to have better incentive structures.”

Thinking Lessons Structure Incentives

Author:Richard Thaler

“One simple step firms can take is make sure that people that are getting paid a lot of money, say more than a million or two, that a big chunk of that money is deferred. That's going to change the whole ballgame.”

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“The money has to be deferred with what they call "clawback," which means they can get it back if I lose it all. So that guy making ten million a year selling credit default swaps, if we're going to keep five million of it in escrow for ten years, and with the right to go back and get it, if he starts losing money, then we're going to give people the right incentives not too take so much risk.”

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Author:Richard Thaler

“Living here on Earth, we breathe the rhythms of a universe that extends infinitely above us. When resonant harmonies arise between this vast outer cosmos and the inner human cosmos, poetry is born.”

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