Home 2017-07-28T13:07:05+00:00

Making the Grade

By | December 13th, 2017|

Can investors learn something from test-taking strategies? Public Domain. Source: US Navy It may be close to the end of the year, but it’s also college application season. A lot of high-school seniors are filling out the Common App, writing and re-writing essays, and anxiously awaiting their latest test scores. And there’s a test-taking technique that kids use to improve how they do on standardized [...]

Gold, Lead, and Collateral

By | December 12th, 2017|

Collateral dominates structure. Page from Alchemy treatise, c. 1300. Source: Wikipedia That’s an investor’s way of saying that you can’t turn lead into gold. It’s been an investment theme of mine for as long as I’ve been managing money. I started my investment career trading bonds in the mid-‘80s. Mortgage-Backed Securities were a new thing. Investors were starting to learn about prepayment risk, as interest [...]

Race Against the Machines

By | December 11th, 2017|

Does automation destroy jobs? Sabots from Brittany. Photo: Thesupermat. Source: Wikipedia The concern that new technology will put people out of work has been around at least since 18th-century French peasants threw their wooden shoes, or “sabots,” into industrial machines to destroy them – thus becoming the first “saboteurs.” In the early days of the industrial revolution the Luddites in England broke weaving equipment out [...]

Trading Bears and Kitties

By | December 8th, 2017|

Remember “Beanie Babies”? Photo: Jonny Connormah. Source: Wikipedia My kids went gaga over Beanie Babies in the ‘90s. The cute plush toys are filled with plastic pellets rather than conventional stuffing, which game them a more flexible feel. People began collecting them, then trading them like financial assets – the way some people treat baseball cards. At one point, Beanie Babies accounted for 10% of [...]

Flying by Instruments

By | December 7th, 2017|

How much should we trust our gut? Photo: Adrian Pingstone; Source: Wikipedia Every pilot receives some instrument training. This makes sense. There’s always a chance you can get caught by unexpected weather. Getting tossed around by turbulence when there’s no visibility outside is disorienting. You feel like you’re moving when you’re stable, you think up is down, and vice-versa. The first rule that’s drilled into [...]

Flat and Flatter

By | December 6th, 2017|

What does a flat yield curve mean? Photo: Billy Hathorn; Source: Wikipedia 130 years ago the English schoolmaster Edwin Abbot wrote the novella “Flatland” about a two-dimensional world inhabited by geometric shapes. There’s no depth in Flatland, only height and width. It seems like investors today are entering a “flatland” of their own. Normally, long-term bonds yield significantly more than short-term bonds. We call this [...]

The Roots of Innovation

By | December 5th, 2017|

The apple doesn’t fall far from the tree. Photo Source: Pixabay That’s the lesson from a new study about innovation, inventions, and incentives. The children of inventors are far more likely to become inventors themselves. Income, education, and geography also matter. But it’s the home environment that has the biggest impact. Some researchers studied 1.7 million patent office applications and 1.2 million tax returns, asking [...]

Winners and Losers

By | December 4th, 2017|

Who wins and loses from tax reform? Photo: Derek Lilly. Source: Morguefile Most of the comments on tax reform center on what happens to individuals – the personal exemption, the mortgage interest or medical expense deduction, and so on. That’s understandable: people want to know how different versions will directly affect them. And the bill’s depends on each taxpayer’s personal situation But the point of [...]

Gifts Around the Tree

By | December 1st, 2017|

Why do we give gifts? Photo: Kevin Kay. Source: Wikipedia The Native Americans had “potlatch.” Pacific Islanders had “Aropa.” Techies today have open-source software. And most people exchange gifts around the holidays. But is gift-giving rational? A lot of economists say no. They look at the all the fruit cakes sent-but-never-eaten or the ugly ties or sweaters politely acknowledged and then discarded. Theses economists see [...]