Quotes from Sebastian Mallaby

To read history, to debate history, is to test our assumptions in the laboratory of real events; to learn, in the process, some appropriate humility about our capacity to forestall crises; and to grasp that extraordinary moments generally demand that ordinary assumptions be hurled out the window. Model-based social sciences, with their search for certainties that appear constant in large sets of data, teach neither humility nor flexibility.

In the first weeks of October, Citadel fought a two-front war against these enemies. It jettisoned assets that were not part of its main strategies, thus raising capital without telegraphing its distress too obviously.

By contrast, hedge funds made it through the mayhem without receiving any direct taxpayer assistance: There is no precedent that says that the government stands behind them.

The firm found it could charge clients almost anything it pleased: It billed them for expenses amounting to more than 5 percent of their capital before slapping on the 20 percent performance fee.

Small companies may excel at generating ideas, but big companies excel at implementation.

Capitalism works only when institutions are forced to absorb the consequences of the risks that they take on. When banks can pocket the upside while spreading the cost of their failures, failure is almost certain.

there is no single decision you will make that will impact your company value more than the pricing," Horowitz declared, with oracular finality. When a software company market a new product - something original that nobody has seen before - it has once chance to set the price. Whatever point it chooses will stick in customers' minds, making it hard to raise prices later. Moreover, any given price difference will generate a bigger difference in a company's profit margin.

Growth was running at 40 percent per month, but what was more impressive was the motor that was driving it. Unlike Yahoo, which was pouring money into marketing, eBay's marketing budget was zero. Its hectic expansion was instead propelled by Metcalfe's law: as the size of its auction network grew, its value rose exponentially. The more sellers listed stuff on eBay, the more bargain hunters were drawn to the site; the more buyers there were, the more sellers turned to it.

One hedge fund had imploded, threatening to start a systemic fire. Another hedge fund had swooped in, acting as the fireman.