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What is the best approach to picking good stocks (strong companies) to invest in? Take a second to think about this and how you can apply this to your life.  Maybe these ideas could provide a little guidance while you’re implementing you investment plan, for this or next year.

What’s is the overall pattern of interest-rate movement these days? I think of rates as tea leaves, except, more reliable if you know how to read them.  What do you think?

A few months ago, I was called “boring banker from a boring bank” by a fellow banker at Washington Mutual.  Recently, I have been thinking about that in light of the current credit crisis, i.e. since September 25th, when regulators seized Seattle-based Washington Mutual, the country’s largest S&L institution.  I do not feel that we, at the bank I work at, are so boring.  WaMu had more than $300 billion in assets, more than seven times what Continental Illinois across the street from us had in 1984.  Where was their Risk Management?  It is relevant to me as a professional in Risk Management in banking.  We review numbers monitoring and reporting the level of risk across the bank’s portfolio and setting limits for overall credit and market-risk positions edging in favor of things we understand and can value.  I am not saying that there is no gain in the creation of new financial instruments, like CMS, CDSs and other alike, but there may be something to be said about the regulatory oversight or ‘lack of’ on these instruments.  There were so many incentives of profitability throughout the ‘food chain’ in the financial markets for the players in the OTC markets where these instruments trade and even for the originators of their underlying assets, i.e. subprime mortgages, that I go back to the “oversight” of the prevalent incentives question.  What do you think?

I always saw Milton Friedman as a changing agent, but, he was more than that.  One of the very first books I read as a freshman in college majoring in economics was Free to Choose.  It impacted my life.  It not only entice me to study economics, it made me see the field as an array of analytical tools that can be used to promote liberty.  Leaving Latin America in the 1980s and coming to study to the U.S., I had preconceptions of how Friedman’s thinking affected countries south of the border, e.g. Chile.  Debate still rages about economic policies that politicians forced down to citizens was too harsh based on Friedman’s theories, but his analysis and prescriptions have worked for many developed economies.  Unfortunately, many countries in Latin America are revering back to approaches with Marxist undertones tried before.  Time will tell how they fare.  Regardless, Friedman has left us a legacy of economic thought that no one can deny has made this a better world.

Off the record Notes for Students of Finance and Economics