Ten Commandments for Investors (Application)

By | 2014-09-09T15:59:44+00:00 June 29th, 2012|Global Market Update|

Are the Ten Commandments just for the religiously-minded? That’s a fair question, as is the question as to why a finance guy is spending so much time on a religious text. The short answer is that we can learn investment lessons from any great work of literature, religious or secular. Great literature, after all, is just a reflection on human nature, in all its complexity. Investing is also a reflection on human nature, but written in the language of finance. It’s perfectly sensible that [...]

Ten Commandments for Investors (Part 6)

By | 2014-09-09T15:59:06+00:00 June 27th, 2012|Global Market Update|

“Do not murder” seems pretty straightforward. How does this help us invest? On the face of it, the sixth commandment couldn’t be more simple: murder is a universal human prohibition. But understanding the context is the key to applying the text. At the time of the Exodus—when the Ten Commandments were given—Israel was a tribal confederation. They may have all traced their heredity back to a single ancestor—Jacob, or Israel, Abraham’s grandson—but their real loyalty was to their closest family members. In a pre-literate [...]

Ten Commandments for Investors (Summary)

By | 2017-07-17T12:34:54+00:00 June 25th, 2012|Global Market Update|

Many commentators have noted that the second five of the Ten Commandments have a different focus than the first five: while the first group focuses on the believer’s relationship towards God, the second set emphasizes the his or her relationship with others. This may be the reason why Jesus, in a famous encounter, is said to have summarized the Ten Commandments—and indeed the full corpus of Jewish law—into two principles: love God, and love your neighbor. His “first and greatest” command, to love God, [...]

Banking on Ratings

By | 2014-09-09T15:57:48+00:00 June 22nd, 2012|Global Market Update|

Moody’s just downgraded a lot of banks. What does it mean? Yesterday Moody’s Investor Services lowered the credit rating that they assign to 15 global banks. Large banks from the North America and Europe were all dropped one to three notches in Moody’s view. No one was dropped to junk bond status, and for the most part, the relative pecking order among banks was preserved: in the US, JP Morgan is still on top; in Europe it’s HSBC. So what changed? These are all [...]

Models Behaving Badly

By | 2014-09-09T15:56:33+00:00 June 21st, 2012|Global Market Update|

Physicists are looking for the “God particle.” Could its discovery affect investments? The scientists at the CERN Institute are huddling over the results of some supercollider experiments. They show a tantalizing bulge in the curves that has a “one-in-a-thousand” chance of being random. That is, there’s a very good chance that the scientists have found evidence of the Higgs Boson, a long-predicted but never-observed key to the Standard Model of physics. The Standard Model is a set of physical theories that combines the forces [...]

Chapter and Verse on Greece

By | 2014-09-09T15:53:47+00:00 June 20th, 2012|Global Market Update|

Will Greece get a break on its debt? The Greeks have been cutting public sector wages and increasing taxes in an attempt to reign in their budget deficit. Even so, their level of government debt is around 2 times the size of their economy, and their economy is stalling out in a highly regulated environment. The austerity measures are designed to bring the government budget into balance, so Greece can pay down enough of its debt by 2020 so that it can go back [...]

European Options

By | 2014-09-09T15:53:17+00:00 June 19th, 2012|Global Market Update|

What’s up with government bonds? On the face of it, global bond yields appear to be at crazy levels. Ten-year government bonds vary from insanely low levels, like Japan and Switzerland at less than 1%, to Italy and Spain near 6% or even 7%. In the middle are the US and the UK, with their ten-year bonds yielding around 1.5%, even as long-term inflation runs around 2-2.5%. It looks like investors are paying their governments for the privilege of parking their money. So is [...]

Greek Drama

By | 2014-09-09T15:51:24+00:00 June 18th, 2012|Global Market Update|

It looks like the Greeks just voted to stay in the Euro. What does this mean? In the short-run, this eases fears of an imminent rupture within the Euro zone, where Greece could be the first of a number of indebted countries departing the common-currency area. The fear is that a Greek exit would trigger financial contagion that might threaten financial institutions around the world. Those fears have been allayed for the moment. By itself the vote doesn’t solve Greece’s problems, but it does [...]

A World in Crisis?

By | 2012-06-15T06:14:17+00:00 June 15th, 2012|Global Market Update, Recession|

Having looked at the first five of the Ten Commandments, it’s time to take a break and discuss some other issues. One of the most pressing is the state of the global economy.With Greek elections coming up this weekend and the leaders of Europe holding an economic summit towards the end of the month, it’s appropriate to ask whether the world’s economy is in crisis. Unemployment in the US is stubbornly high, and it’s worse in Europe. Their finances are in a shambles, with [...]

Ten Commandments for Investors (Part 5)

By | 2014-09-09T15:49:30+00:00 June 14th, 2012|Global Market Update|

Often people have difficulty remembering all of the Ten Commandments. But the Fifth Commandment, “Honor your Father and Mother,” is one that many recognize right away. The wisdom of honoring one’s parents seems self-evident: their experience, their greater knowledge, and the effort they put in to care for and raise their children is naturally worthy of respect. And we even have special days set aside for this purpose: Mother’s Day and Father’s Day. But it’s easy to forget. We seem to have attention deficit [...]