Financial diversification before modern portfolio theory: UK financial advice documents in the late nineteenth and the beginning of the twentieth century

The paper offers textual evidence from a series of financial advice documents in the late nineteenth century and the early twentieth century of how UK investors perceived of and managed risk. In the world’s largest financial centre of the time, UK investors were familiar with the concept of correlation and financial advisers’ suggestions were consistent with the recommendations of modern portfolio theory in relation to portfolio selection strategies. From the 1870s, there was an increased awareness of the benefits of financial diversification - primarily putting equal amounts into a number of different securities - with much of the emphasis being on geographical rather than sectoral diversification and some discussion of avoiding highly correlated investments. Investors in the past were not so naïve as mainstream financial discussions suggest today

Financial diversification strategies before World War I: Buy-and-hold versus naïve portfolio selection

This study contributes to a growing volume of scholarship that highlights the importance of financial diversification in business history. It shows that, pre-WWI, financial advice for equal portfolio weighting, the so-called naïve diversification, then called scientific investment or geographical distribution of risk, was a sophisticated strategy for Victorian investors and not suboptimal to Markowitz optimization. Drawing upon a unique dataset of 507 individual portfolios at death, this study shows that, although Victorian investors, in particular wealthy investors, did diversify investment risk across a number of securities, they did not hold equally weighted portfolios. It explores possible reasons for the unbalanced nature of investor portfolios and dismisses socio economic factors, illiquidity, passive ‘buy the market’ and market timing strategies as possible explanatory factors. The results rather point to a strategy of naïve diversification spread over time, a ‘buy as you go and hold strategy’, buying new securities as savings allowed and holding them until death

Does the WTO Violate Human Rights (and Do I Help It)? Beyond the Metaphor of Culpability for Systemic Global Poverty

I challenge an influential analysis (the ‘participation account’) that attributes human rights violations to the global economic system, and attributes complicity with those violations to citizens of affluent countries. The participation account is shown to rest on a faulty account of wrongful action. An alternative, and superior, account of wrongful action (the ‘agency account’) is proposed, and used to analyse the rules of the global economic order. These include the ‘foreground rules’ of trade agreements and the ‘background rules’ of state privileges. The agency account identifies wrongful action with unreasonably imposing losses/risks. The systemic bad effects of the economic system and its rules are shown not to be due to agents in the system acting unreasonably in this sense. The metaphor that the economic system ‘violates rights’ and that we act in complicity with this are thus shown not to stand up to analysis

A multimeasure approach to investigating affective appraisal of social information in Williams syndrome

People with Williams syndrome (WS) have been consistently described as showing heightened sociability, gregariousness, and interest in people, in conjunction with an uneven cognitive profile and mild to moderate intellectual or learning disability. To explore the mechanisms underlying this unusual social–behavioral phenotype, we investigated whether individuals with WS show an atypical appraisal style and autonomic responsiveness to emotionally laden images with social or nonsocial content. Adolescents and adults with WS were compared to chronological age-matched and nonverbal mental age-matched groups in their responses to positive and negative images with or without social content, using measures of self-selected viewing time (SSVT), autonomic arousal reflected in pupil dilation measures, and likeability ratings. The participants with WS looked significantly longer at the social images compared to images without social content and had reduced arousal to the negative social images compared to the control groups. In contrast to the comparison groups, the explicit ratings of likeability in the WS group did not correlate with their SSVT; instead, they reflected an appraisal style of more extreme ratings. This distinctive pattern of viewing interest, likeability ratings, and autonomic arousal to images with social content in the WS group suggests that their heightened social drive may be related to atypical functioning of reward-related brain systems reflected in SSVT and autonomic reactivity measures, but not in explicit ratings

Three (Potential) Pillars of Transnational Economic Justice: The Bretton Woods Institutions as Guarantors of Global Equal Treatment and Market Completion

This essay aims to bring two important lines of inquiry and criticism together. It first lays out an institutionally enriched account of what a just world economic order will look like. That account prescribes, via the requisites to that mechanism which most directly instantiate the account, three realms of equal treatment and market completion - the global products, services, and labor markets; the global investment/financial markets; and the global preparticipation opportunity allocation. The essay then suggests how, with minimal if any departure from familiar canons of traditional international legal mandate interpretation, each of the Bretton Woods institutions - particularly the GATT/WTO and the IMF - can be viewed at least in part as charged with the task of fostering equal treatment and ultimate market completion within one of those three realms. The piece then argues that one of the institutions in particular - the World Bank - has, for reasons of at best negligent and at worst willful injustice on the part of influential state actors in the world community, fallen farthest short in pursuit of what should be viewed as its proper mandate. The article accordingly concludes that a fuller empowerment of the Bank to effect its ideal mission will press the Bretton Woods system more nearly into ethical balance, and with it the world into justice; and that full empowerment of the GATT/WTO and IMF should be partly conditioned upon the fuller empowerment of the Bank