The next time an investing guru presents you with ironclad statistical results, remember this article:
Unreliable neuroscience? Why power matters – Suzi Gage
In a paper published today in Nature Reviews Neuroscience we reviewed the power of studies in the neuroscience literature, and found that, on average, it is very low – around 20%. Low power undermines the reliability of neuroscience research in several important ways.
Just about everywhere I go, I meet investors who tell me so-called core inflation is a dumb metric and food inflation is very high. Check out this recent graphic from Bloomberg Businessweek by Dorothy Gambrell.
“In 1984, the average U.S. household spent 16.8 percent of its annual post-tax income on food. By 2011, Americans spent only 11.2 percent. The U.S. devotes less of its income to food than any other country—half as much as households in France and one-fourth of those in India.”
In the words of Stan Lee, ‘nuff said.
For some years now this blog has argued the inclination to hold the pan European unity project together would be stronger than most believed. Despite ad infinitum and ad nauseum calls for increased nationalization, the Eurozone refuses to buckle just yet. If it will one day die, and it certainly could, it’ll die hard.
Now that it’s Q1 2013, this ought to be stunning to many pundits. Just as global equity markets’ resilience and lack of European meltdown has astounded many investors, too.
Graphic from the Wall Street Journal.
Markets adapt, and long-term profits approach zero for high-speed trading. The winners are market participants, who benefit from higher liquidity and smaller bid/ask spreads. The part most folks miss about the flash crash is the market self-corrected as fast as it sank.
Regulator, Go Slow on Reining in High-Speed Trading: Algorithm-driven trading appears to be self-correcting. That’s good—the hyper-fast world needs it.
I don’t always agree with Jim Cramer, but here is some good sense that’s been espoused on this page for some time now:
You know what didn’t work in 2012? Risk on, risk off. As hard as I tried to stamp out this ridiculous bit of hedge-fund-ese, I was not able to. There are too many commentators out there, and too many traders who want to succumb to this kind of non-rigorous, intellectually lazy thinking, and it’s impossible to shut them all down. But let 2012 be a lesson to you: It was revealed that you would have underperformed these people if you’d followed them. Notice I say “underperformed,” because one thing is for certain — none of these blowhards will let you see their returns after what I bet was a fiasco year for what I can only call an “alleged” strategy.
Let this be the death of risk on, risk off – Jim Cramer
Check out Guy Sorman’s latest article in City Journal: A Brief History of American Prosperity.
It will both soothe those fearing the demise of the US economy and inform of the dynamic American economic past.
Ken Fisher and Lara Hoffmans have published their layperson’s guide to building a basic wealth plan — I couldn’t recommend it more.
Much like his other books, Ken Fisher takes a route of empowering the average investor, being less didactic or preachy and offering usable perspectives in terms everyone can understand.
In my view, it’s one of the ultimate things a skilled expert can do for us: to give his knowledge back in a way all can participate in. Ken has seen it all, done it all, and been very good at it for very long time; it’s a pleasure to read about the fundamentals of wealth-building with all the signature wit and uncommon perspective he and Lara always bring.
As said on this blog way back in April: I’m Adopting “Grey Pigeons”
Why? Because the concept of black swans is one of the most overwrought notions in recent financial memory. Now the Economist is getting in the act:
Gray Swans: Why Frugal Firms Keep Piling Up Cash – The Economist
Mind you, they’re seeing gray for slightly different reasons, but the logic remains: black swans are black swans for their rarity. For the market to have all sorts of little shocks, ebbs, flows, and unexpected events is status quo.
There are few on the planet who’ve studied Star Wars as closely as me. Not sure if I should be proud of it, but it’s true.
But to understand Star Wars is also to have spent a lot of time on the Flanneled Prophet himself, George Lucas.
I think he’s been planning his sale to Disney for a long time. Lucasfilm would wither and slowly wane if they tried to remain independent: Disney is the only true logical buyer and can use its resources to grow the franchise. Plus, Lucas monetizes and better than doubles his wealth in the process.
This is a savvy move to see a legacy perpetuated long after Lucas is gone. Which is what Star Wars deserves.
As for the stories themselves…it’s my view these are timeless, archetypal, universal tales—which means, if I’m right, they should survive and thrive with new authors and new directions with new generations at the helm. Just like 10,000 writers and artists re-imagined Batman, Superman, Spider-man, Achilles, Thor, Rama, and so on, the Star Wars universe deserves such a fate too.
And anyway…there will be NEW STAR WARS FILMS. Which is awesome. My currently 4 year old nephew will be 8 when the first new one comes out, and I don’t know which of us will have more fun when it does; seeing his reaction alone will be worth the while.
Lately, there’s been a torrent of popular press refuting the notion that small business “drives” the US economy. This is sheer nonsense.
The only way to get a big company is for a small one to get big. Huge companies don’t just materialize out of thin air. (Occasionally there are spin-offs, but these are comparatively rare.) Of course big companies have more profits and do more hiring—they’re, well, a lot bigger. But no company starts out huge; they start small. You have to have lots and lots and lots of small companies come and go, with access to capital, hiring and firing, to get just one Facebook or Microsoft or FedEx, or Caterpillar, and so on.
The reason this is so important is because we need constant renewal of our big companies, they aren’t at all static in place or size—take a look at what was in the Fortune 500 just 20 years ago versus today…vastly different! Small companies become big companies and big companies falter or shrink (hello, Kodak?), and those are the things that drive growth, innovation, productivity, and jobs. Not a stagnant pool of big companies that expand and contract like an accordion with growth/recession.
Nurturing the real job creators – John Bunzel