Why Do Economists Sometimes Assume Away Reality?

I’ve never really understood the way many economists think. For instance, take the latest from Paul Krugman in which he tries to explain why his model of the economy helped him to predict some things in recent years. What’s so strange is how he assumes away reality: “What I did…

Weekend Q&A and Open Forum

It’s been too long since I did a Q&A and open forum here so feel free to use the comments to let me know what’s on your mind and if I can help with any questions then feel free to ask away. Poetry and love making questions have priority as…

Are Foreign Bonds Worth the Risk?

Excellent piece here by Michael Batnick on foreign bonds. Michael and I both agreed that John Bogle was wrong to say that an investor should shun foreign stocks, but what about foreign bonds?  There’s a lot to like about foreign bonds.  Russell Investments laid out a good case here.  For…

Buffett and Munger on Being a Hack

“I believe in the discipline of mastering the best that other people have figured out. I don’t believe in just sitting down and trying to dream it all up yourself. Nobody’s that smart.” – Charlie Munger

“Do you Want to be Right or do you Want to Make Money?”

I can’t remember the first time I saw the quote in the title of this post (maybe this Barry Ritholtz post), but it always stuck out to me. I will never forget the emotion I had following the financial crisis – that gripping fear. I went about 6 months in…

Rail Traffic Trends Hanging Strong Despite Oil Collapse

Oil prices are collapsing, but trends in rail traffic are hanging in there.  The latest weekly reading on rail traffic came in at 4.5% on a year over year basis and brought the 12 week moving average down to 3.6%.  That’s the lowest reading since March of this year, but…

Monetarism

The Achilles heel of monetarism is its undifferentiated concept of the monetary base. Leaders of the theory refer to it reverently as “the base”.

Are Bonds Really Less Risky than Equities?

It’s practically an investing axiom that government bonds are much less volatile than equities. But that depends on how you look at it. In fact, our research suggests that income streams from stocks are actually much less volatile than those of government bonds.