learn

I Wish That I Knew What I Know Now, When I was Younger

“What do you wish you knew, that you know now, when you were first starting out after college?”

Fail_WP

Scott Sumner Says Silly Things

Scott Sumner is out with a new post making some rather bold assertions about last night’s BOJ announcement which sent the Nikkei Index surging 4.8%.  Specifically, he says this action discredits Keynesian economics, RBC theory, and the theory of beggar-thy-neighbor policies.  He says: “Yes, these theories have been totally discredited dozens…

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psychology_think_thinking

Managing Someones Else’s Emotions

“Financial advisors frame themselves as investment managers, providers of “beat-the-market” pills, when, in truth, they are mostly managers of investors.” – Meir Statman

question_mark_WP

Q&A…Have at it

With the end of QE I figured it might be time for another Q&A. Feel free to use the comments to ask me whatever is on your mind. I am proficient in misunderstanding the effects QE, the monetary system, the financial world, relationships, love, sports as well as most other things. So please let me know how I can further muddy your understanding of the world. You’re welcome in advance.

the-federal-reserve

Distinguishing the Fed’s Securities Purchases from Monetary Expansion

There has been a bit of confusion about what today’s FOMC announcement means with respect to Quantitative Easing. The statement says that ” the Committee decided to conclude its asset purchase program this month”. It’s important to point out that while this is the end of the Fed’s bond purchases (for now), the US monetary expansion has ended this past summer. The outcome is visible in the the banking system’s excess reserves, which flattened out around July.

strategy2

More Thoughts on “Fad Investing”

In a recent post I called factor investing “fad investing” (see here) because it is, at its core, an ex-post view of the world that implies that the markets will perform a certain way in the future because they’ve performed a certain way in the past. That is, many of…

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QE

QE: Until We Meet Again….

The Federal Reserve is expected to officially announce the end of Quantitative Easing.  I’ve spilled an unhealthy amount of ink here over the years on the topic and I doubt that my “QE Pen” is going to be tucked away for all that long.  That is, as I’ve stated in…

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divergence

My “Most Important Chart in the World”

Business Insider has put together another excellent set of the world’s “most important charts in the world”.  The list is from “Wall Street’s brightest minds” and also me.  My contribution was Europe related: “The divergence between the USA and the EMU remains the most important point of contention in the…

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Fail_WP

Bond Market Narrative Fails

The irritating thing about the failure of the “bond bubble” calls in recent years has little to do with bad market predictions.  Anyone who’s been in the markets for more than a few years knows that bad predictions happen.  But what’s really frustrating about the failure of the “bond bubble” calls…

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rear-view-mirror

Fad, I mean, Factor Investing

When Eugene Fama couldn’t explain why beta didn’t cover all of the stock market’s various twists and turns he started to explain the market’s “efficiencies” by adding various “factors” to his model.  He expanded it to the 3 Factor model and then a 5 Factor model and today we seem…

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bear

Everyone Hates Bonds….

Just a brief follow-up on the bond bubble post…. A key aspect of any bubble is excessive euphoria.  In fact, one of the key aspects of a bubble is that the market appears totally rational and the majority of investors agree that the asset price trends appear sustainable.  This is,…

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bubble

Thinking About Bond Bubbles….

A little over four years ago it was very popular to declare that the US Treasury Bond market was a “bubble”.  A number of high profile people made that prediction including Jeremy Seigel, Nassim Taleb and many others.  Even Warren Buffett was hinting at a bubble.  There were also many…

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Thinking-Man

Don’t Take This Personally

“I wasn’t unlucky, I got outplayed. I got outplayed that time. But I know I’m good enough to sit at that table.” – Mike McD, Rounders

nerd

The Profits-Investment Disconnect? (Pretty Nerdy)

I always talk about how important it is to understand accounting when doing economics.  While most economists want to build rigorous mathematical models of the world I would much prefer rigorous stock-flow consistent models of the world by understanding the relationship between income statements, cash flow statements and balance sheets….

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Global Inflation Update – Continued Disinflation

Global disinflation has picked up pace in recent months and several regions of the global economy are now on the verge of a full blown deflation. The latest readings on inflation are just about unanimous – there’s widespread disinflation, or a slowing rate of positive inflation. The latest reading out of…

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