Warren Buffett’s favorite indicator of economic growth continues to gain momentum here in the early spring. The latest year over year reading from AAR shows a 9.3% increase in rail traffic. This brings the 12 week moving averaged to 5.7%, the highest reading since January.
For now, the “bullish case” remains alive and well. The media will go on berating those heretics who dare to point out the risks that prevail. However, the one simple truth is”this time is indeed different.” When the crash ultimately comes the reasons will be different than they were in the past – only the outcome will remain same.
This recent Gallup survey on expected future returns of asset prices is pretty interesting. It shows that most Americans still think that owning a home is the best way to generate a high return in the future:
The Investment Company Institute (ICI) began tracking flows into equity funds in 2007 which I have overlaid with the investor psychology cycle. In this manner, you can witness investor behavior in “real time.”
Terrance Odean is the Rudd Family Foundation Professor of Finance at the Haas School of Business at the University of California, Berkeley. Today I ask (in bold) and Terry answers what I hope are Five Good Questions as part of my longstanding series by that name (see links below).
This piece at FactSet asked an important question: “is active investment management dead?” As more evidence of the difficulties of active investment management points investors in the direction of “passive” funds, we have to wonder if active investment management is beginning to die off. I don’t think so. Here’s why.
“Truth be told, if you keep buying high and selling low, you should stay out of the stock market, because you’re losing money. Your primary goal as an investor should be not to lose money.” – Carl Richards
Some of you may already know this, but my first book “Pragmatic Capitalism: What Every Investor Needs to Know About Money and Finance” is set to publish in July. We’re still in the late stages of production, but some of the first reviews are trickling in. This one is from Publisher’s Weekly: