Diversified Thinking

By | 2017-07-17T12:34:57+00:00 February 15th, 2012|Global Market Update|

A great deal of research documents that married people are financially better off than singles. Apart from having a lower tax rate for “married, filing jointly,” married people enjoy other advantages: pooled living expenses, shared shelter, greater employment benefits, lower insurance rates, and so on. But one significant advantage is psychological. What I mean is this: in most relationships one partner tends to think long-term and the other short-term. Long-term thinking entails planning for retirement or saving for education; short-term thinking involves investment opportunities [...]

When Bad Things Happen

By | 2017-07-17T12:34:57+00:00 February 13th, 2012|Global Market Update|

Last week I mentioned how people tend to over-predict extreme events. It’s true. From shark attacks to lightning strikes to monetary collapse, people tend to be overly concerned about statistically remote events, and under-concerned about issues like highway safety or saving for retirement. It may be the news media or the nature of our minds, but we often obsess over statistically unlikely events to our financial and personal detriment. But bad things do happen. Houses are not likely to catch fire, but if they [...]

Love Is In the Air

By | 2017-07-17T12:34:58+00:00 February 13th, 2012|Global Market Update|

Sent: Monday, February 13, 2012 11:48 PM Subject: Global Market Update What can we learn from Valentine’s Day? I’m probably going to get in trouble for this, but Valentine’s is an elective holiday. Spouses and sweethearts understand that if you don’t have a job, it’s hard to spend cash on flowers and chocolate. That’s one reason why gift spending fell off a cliff in 2009 during the recession, and in 2010 just as the recovery was getting going. But 2012 looks to be a [...]

Snapping Our Judgement

By | 2014-09-09T16:37:46+00:00 February 10th, 2012|Global Market Update|

That’s the question that we all face every day. Life sends us umpteen demands to make predictions. Some are pretty easy: how long will it take me to drive to work; will my spouse appreciate a special gift on Valentine’s Day? Others are hard: how much concrete will be needed for a building; what will Facebook’s earnings be next year? When we make predictions, we draw on a combination of calculation and experience. Some calculations are precise, using engineering tables and detailed formulas. Others [...]

A Population Bomb?

By | 2012-02-09T11:13:02+00:00 February 9th, 2012|Global Market Update, New Markets|

Are demographics destiny?That’s what a couple of researchers sought to find out. Using UN population numbers and economic and capital market data, they looked at 60 years worth of information in 176 countries. Because demographic data are fairly predictable and individual behavior follows a life-cycle pattern of education, production, saving, and retirement, they attempted to fit a mathematical function  to see what the next ten years might look like for different regions of the world.What did they find? […]

Buck Hunting

By | 2014-09-09T16:38:13+00:00 February 8th, 2012|Global Market Update|

The SEC is proposing new rules to govern money market funds. Among them are restricting withdrawals, requiring fund sponsors to have equity in their funds, and no longer allowing the funds to have a fixed price and daily interest. Instead, the funds will have a floating net asset value like other mutual funds. The SEC’s aim is to avoid another fund “breaking the buck” during a financial crisis, as the Reserve Primary fund did in 2008. This led to a run on the institutional [...]

Are You Ready for Some Football?

By | 2014-09-09T16:36:12+00:00 February 7th, 2012|Global Market Update|

Sunday’s Super Bowl was viewed by about 111 million people—a record. Almost half of all US households tuned in. And viewership actually went up during the game: almost 118 million people watched Tom Brady try to connect down the field in the last seconds, and about 114 million viewers saw Madonna’s half-time show. The National Football League’s brand is tops. In 2010 18 of the top 20 highest rated telecasts were NFL games. In 2011 17 of the top 20 were. The names of [...]

Super Fruit Bowl

By | 2012-02-06T11:21:06+00:00 February 6th, 2012|Global Market Update, New Markets|

The Giants won. Is it safe to go back into the stock market? Every year around this time market mavens trot out the “Super Bowl Indicator” to discuss whether the stock market is going up or down this year. A seemingly strong correlation appears to exist between who wins the Big Game and how the market performs in the ensuing year. According to this theory a win by the AFC heralds doom and gloom, while an NFC victory means happy days are here again. [...]

In Your Facebook

By | 2014-09-09T16:34:39+00:00 February 3rd, 2012|Global Market Update|

IPOs are exciting. They can give investors a chance to get in on the ground floor of a new venture. They often move 20-30% in one day. And, in the case of Facebook, they can become cultural events—in the news, in the papers, in everyone’s conversation. But they’re also financial events. And with all financial events, the numbers really matter. The first number of note is the value of the company. Rumors are that they might value the company at $100 billion. That’s 30 [...]

The New/Old Face of Banking

By | 2014-09-09T16:32:14+00:00 February 2nd, 2012|Global Market Update|

Oh, I know the “It’s A Wonderful Life” answer of “Fred’s money is tied up in Joe’s house.” Financial intermediation was a way that banks functioned in the past, transforming a large number of short-term deposits into a few longer-term loans—and providing some financial expertise along the way. At their best, banks recycled cash within the community and helped it invest in new ways to make the economy grow. But that social compact frayed a long time ago. Now mortgages are underwritten by Federal [...]