Playing the Optimal Game Requires an Optimal Understanding

I used to gamble quite a bit.  Not because I enjoyed losing money, but mainly because I was convinced that I understood the games better than most.  I don’t know if that was true (probably not), but my urge to play was not really the result of an addiction or…

“Speculation has always been a part of the market and always will be.”

It was the spring of 1976. Investors were still licking their wounds from the severe bear market of 1973-74. Donaldson, Lufkin & Jenrette, an investment bank, was hosting a conference that matched two investing legends onstage at the same time — Ben Graham and Charles Ellis.

The Fed is not the Reason You’ve Been Wrong

Blaming the Fed is not a legitimate excuse for failed understandings about the economy and the monetary system.

Is Levering Bonds a Loser’s Game Today?

Multi-asset strategies like risk parity owe much of their popularity to their ability to navigate the global financial crisis. Lately, critics have cited levered bond returns as the driver—and as a looming headwind. We think they’re missing a key point.

Ideological Through-and-Through

Homo economicus is a myth. This alleged “rational man” is as non-existent as the Loch Ness Monster, Bigfoot and (perhaps) moderate Republicans. Yet the idea that we’re essentially rational creatures is a very seductive myth, especially as and when we relate the concept to ourselves (few lose money preying on another’s ego). In fact, we tend to think that we’re almost superhuman in our ability to invoke reason to our advantage.

Why do Financial Types Hate Fed Intervention?

Traders hate Fed intervention because they think it manipulates an otherwise “free” market. But is that a rational perspective?

The Myth of Passive Investing Begins to Unravel….

You know an idea is starting to go mainstream in the investment world when it hits the pages of the Wall Street Journal.  I have been harping endlessly this year about how important it is to understand that passive investing is a myth and a marketing tale.  And today, we…

Great Investors Think in Terms of Probabilities

The smartest investors know that they’re actually not that smart.  That is, they recognize the fact that they’re going to be wrong a lot.  But in realizing this they also acknowledge a more important fact – they don’t have to be right all the time to succeed.  They just have…