Investing for Tax-Efficient Portfolio Income

With tax-exempt income from US municipal bond portfolios still near historic lows, investors spending from their portfolios can no longer get the income they need by simply increasing their allocation to high-quality, intermediate-duration bonds. As a result, many investors today are chasing yield into dangerous territory.


Are There Flaws in Ray Dalio’s “Machine”?

I was recently asked in the Forum to critique Ray Dalio’s popular video describing how the “economic machine” works.  If you haven’t seen the video you should take a look.  It’s very good.  But I do have some issues with his description of the economic machine.  Here are some of…

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What Will be the Most Likely Cause of the Next Big Downturn?

Predicting a tail risk event is just about always a silly thing to do.  The markets are too complex to predict such things.  Of course, this doesn’t mean we can’t be prepared, but you get the point.  So, knowing that we shouldn’t try to predict what the next big black…

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It’s Always the Same Novel

the truly useful and sound investing principles will always stay the same.


Risk, EMH and Grocery Store Lines

Proponents of the Efficient Market Hypothesis are masters at marketing their concepts by simplifying them into easily discernible ideas.  For instance, I ran across this post by Tim Harford who writes for the FT in which he discussed how the grocery store makes for a good EMH analogy.  The story goes…

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Good versus bad

The Deficit is Down Because the Private Sector is Up

Yesterday’s CBO report on the deficit is being hailed as a demonstration in budget cutting by some people.  Which is weird because total government expenditures are actually UP on a 1 year, 5 year and 10 year basis (not to mention the fact that a “deficit means”, you’re, um, still in…

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The Fed: Easy Peasy

The market was “shocked” by today’s Fed Minutes which showed that the Fed is much more dovish than many think, that is, they aren’t raising rates any time soon.  The hot topic of late has been all about how the Fed is going to transition from Tapering to tightening interest…

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Passive Index Funds Are Lagging “the Market” This Year

Did you fall for the “passive indexing” marketing slogan? If so, you might want to read this post and check yourself into investment rehab….


Today in Disastrous Policy Decisions – Europe Edition

The recent economic data out of Europe continues to underwhelm.  These two charts via Credit Suisse win the unsexy data of the day award: I’ve stated that Europe looks much more “Japanese” than America does.  And the reason is simple – their monetary system remains suboptimal.  The incomplete monetary system…

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Can Silicon Valley Reinvent Banking?

I am generally optimistic about technology.  Heck, I am generally optimistic about most things.  But I don’t feel so optimistic about the idea that silicon valley can shake-up modern banking. In a recent piece on Bloomberg Marc Andreesen says: “We have a chance to rebuild the system. Financial transactions are…

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How Close are the US labor Markets to Normalization?

As discussed here back in April, US labor markets continue to heal, with Friday’s payrolls gains putting 2014 on track to be the best year for job growth since the late 90s. Now many are asking just how far is the employment situation from “normalizing”. Of course it all depends on the metrics used….


Chart of the Day: The End of QE? Not According to Break-evens

Here’s another perspective of the chart I posted the other day showing break-evens, the difference between bonds and TIPS.  This one is from Martin Enlund and Nordea Markets.  It shows the 5 year break-evens along with the Fed’s initiation of different QE programs.  As you can see, this isn’t exactly…

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Boom/Bust Interview Part 2: Macro Thoughts

Here’s the second part of my Boom/Bust interview from last week.  If you missed part 1 you can see it here.  In this video I discussed: The buyback boom and how corporations now prefer using funds to boost EPS and stock prices via share buybacks as opposed to making long-term…

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Global Diversification: Accepting Good Enough to Avoid Terrible

The U.S. stock market is once again trouncing the broader international markets this year. Through the end of September, the total U.S. stock market, as measured by the Vanguard Total Stock Market Fund, is up nearly 7% while the Vanguard Total International Fund is basically flat on the year.


Nobody Needs to Understand the Liquidity Trap

Warning – This post is extremely nerdy and could result in extreme sleepiness. Do not try to read this post while operating heavy machinery.