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Strong Dollar, Weak Dollar: Which One Is “Right?” Neither.

July 11, 2013 Leave a comment

Through most of the last decade, I answered an interminable number of investor questions about whether the weak dollar would destroy the very foundation of our world. (I exaggerate, if only slightly). Now that the dollar is showing some ballast, we get this: P&G to Apple Hurt by Strong Dollar Keep S&P 500 Profits in Check.

Look, I don’t care which way you fall but someone needs to cry foul when we perceive both a strong and weak dollar to be bad. In reality, we’ve had plenty of bull and bear markets in both strong and weak dollar environments, and in my view dollar direction doesn’t generally tell you much about what stocks are likely to do.

Currencies matter. A lot. But don’t get too far lost in this quagmire when it comes to judging the stock market.

Unreliable Science? Same with Investing.

April 15, 2013 Leave a comment

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.

What Food Inflation?

March 5, 2013 Leave a comment

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.

The Euro Project: Die Hard!

February 21, 2013 Leave a comment

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.

Embattled Economies Cling to Euro By MARCUS WALKER and ALESSANDRA GALLONI

PIIGS Wall Street Journal graphic brought to you by Fisher Investments Investing IQ

Graphic from the Wall Street Journal.

What Most Miss about the Flash Crash

February 13, 2013 Leave a comment

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.

By HOLLY A. BELL

 

Risk On/Risk Off is Nonsense, Redux

January 3, 2013 Leave a comment

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

American Prosperity

December 17, 2012 Leave a comment

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.

Plan Your Prosperity from Ken Fisher

December 7, 2012 Leave a comment

Ken Fisher and Lara Hoffmans have published their layperson’s guide to building a basic wealth plan — I couldn’t recommend it more.

Plan Your Prosperity

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.

Gray Pigeons, Meet Gray Swans

November 29, 2012 Leave a comment

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 CashThe 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.

Congrats to the Flanneled Prophet

November 13, 2012 Leave a comment

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.

Joseph Campbell certainly agreed.

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.

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