Risk and Uncertainty in Financial Markets

Paul Fenton

Wednesdays, Noon - 2:00 p.m.
January 11 - February 15, 2006
D.O.C. House

Risk and uncertainty are different and yet the same. The former is randomness with knowable probabilities while the latter is randomness with unknowable probabilities. Both abound in the financial markets but neither is always discernible or properly interpreted.

A recognition and understanding of risk, as well as an appreciation of public sentiment towards uncertainty, is imperative if investors are to avoid a loss or have some protection of their investments. The first part of the course will seek to address this imperative by identifying the various risks and methods of their measurement. The second part will examine the influence of uncertainties on public sentiment. In both cases the emphasis will be on current financial market conditions. The third part of the course will survey some of the instruments and strategies used to offset perceived risks or convert risk into opportunity.

There will be no required text but many handouts will be provided. Class discussion will be encouraged since so many of the risks are subjective.

Paul Fenton had two careers. One was in academe where he was a professor of economics or finance and chairman of a business school faculty. The other was in financial management where he was a mutual fund portfolio manager and president of an investment management company. For the past twenty-five years he has also been either a director or advisor to an off-shore investment group. Paul was educated at Princeton, McGill, and Yale and served in the U.S. Marine Corps during World War II. He currently resides in Woodstock.