How about that?  The lines go together most of the time.  One is the spread on the Moody’s Baa Corporate Bond Index and the other is the ten-day moving average of the VIX.  Let’s not call them measures of risk, but measures of perceived risk.

The trick with these is to not get too caught up in the history of the graph.  Could they go lower?  Yes.  Could they go higher?  Yes.  If you are going to do anything other than invest off of the tendencies of history, you need to decide whether you are getting paid for the prospective risks, not the risks as perceived by the market.  Where would you expect each of these lines to go and why?  (Chart:  Bloomberg terminal.)

the journal

Awhile back, I wrote about my journey into the stacks.  One of the aspects of my research involved looking at the Wall Street Journal on microfilm.  It was a great learning experience.  First, a publication is so much more interesting than the indexed words of the articles.  Display ads, graphics (there were no photos in the Journal back when), and tables of security information provide a richer view of the times than electronic articles do.  Second, it’s fascinating to see the people and firms of today as they appeared then — what they were doing and not doing, and what the issues were.  But what really struck me was how much better the Journal was then than it is now.  It knew its beat and it did it better than any other publication.  Now, it’s trying to compete against the New York Times, and it’s a distant second place.  A real shame.

the skeptic

Speaking of the Times, it had a nice piece on Thursday on Thomas Hoenig, the president of the Kansas City Fed.  No need to try to handicap the wisdom of his dissensions, it’s his willingness to think differently and to speak out that is worth celebrating.  “‘Some people think I should be more part of the group,’ Mr. Hoenig said.  ‘I’m not a group person.’”  Translated:  He doesn’t let the group think for him.  When we look back on the Greenspan years, one thing that sticks out is the enforced consensus that he demanded.  How did that work out for us?  You should “short” organizations at which the free flow of ideas is not accepted and encouraged.  If having Hoenig no longer as a voting member seems like a relief to Bernanke and company, they’re we’re in trouble.

some winning visualizations

It being the end of the year, there are all sorts of “best of” lists being thrown around.  A recent posting on FlowingData highlights what it sees as ten winning data visualizations from 2010.  You might find something that inspires or educates you.

that was then

“Everybody gets so much information all day long that they lose their common sense.” — Gertrude Stein