sensitivity analysis

sensitivity analysis

 

Luiz Zorzella takes a leap into the arbitrary world of luck to explain how unforeseen forces should be considered when shaping strategies. 

8 months ago, I drafted an article explaining why you should do a sensitivity analysis of your strategy to luck.

I was planning to publish it in March of this year, because of St Patrick’s.

That draft started with “Now is the time to be bold.”. I pointed out that the largest Canadian banks were trading at 1.3x their book value – suggesting that investors believed that they were better off if banks kept their money as capital, rather than returning it (US banks were not as uniformly good but were doing just fine).

Then COVID happened and I abandoned my draft and now Canadian banks and the largest US banks are trading close to book value.

That is how Lady Luck works. She is a whimsical diva and she does not take sides.

 

Points discussed in this article include:

  • When times are good
  • When times are bad
  • Applying luck break scenarios to strategies

 

Read the full article, SENSITIVITY ANALYSIS: LUCK, on the Amquant website.

 

Edward Kees provides the commentary from consultation on the Regulated Asset Base (RAB) model for new nuclear power plant investment in Great Britain.

The challenges of delivering new nuclear power plant (NPP) investment in the reformed electricity industry in Great Britain are significant and there is no simple or easy approach to resolve those challenges.
The RAB model may be a useful tool if properly developed and implemented, but:

-Is complex and may be difficult to implement;

-May not clearly reflect the objectives for the British nuclear power industry;

-May not be relevant without a broader review and/or re-opening of the overall approach to the electricity industry structure and electricity market approach in Great Britain; and

-May not deliver desired new NPP investment, or may only deliver new NPP investment with EdF and/or other State-Owned Enterprises (SOEs), such as CGN from China.

We provide a response to the Consultation questions, as context for later sections of this Commentary that describe some issues that must be addressed to attract new NPP investment.

 

Read the full article, #30 – UK RAB Model, on the Nuclear Economics website.