4 ms·
Floors on Losses
- sanj 19y agoPolitics aside, there's an idea I like in here: "Bankers operate under a system that provides stellar rewards when the investment strategies do well yet puts a floor on their losses when they go bad." The market that is available to mere mortals two sorts of bets: buying long and buying short. Most people do the former, because you can only lose as much as you put in: there's a floor on your losses. But some folks buy short, in which case you can lose a whole lot more than you put in. Do folks have ideas of how to constructed (financial) executive compensation to reflect a similar "buying short" reward matrix?