Thinking and Thanking

By | 2017-07-17T12:22:20+00:00 November 30th, 2015|Global Market Update|

This weekend got me wondering: why don’t we say thanks more often? Photo: Seeman. Source: Morguefile Saying “thank you” is one of the first things parents teach their children. We learn to say thanks around the same time that we figure out that Play-Doh isn’t food. So why do so many of us struggle with gratitude in our daily lives? Part of the reason is that we’re just too busy. There are tasks to complete, email to respond to, kids to pick up from [...]

Digging Deeper

By | 2017-07-17T12:22:20+00:00 November 25th, 2015|Global Market Update|

Why do commodity prices keep falling? Photo: Pedro Perez. Source: Morguefile The world is awash in oil right now. And it’s the same story for copper, zinc, and a host of other industrial materials. The price of oil is down 60% from its peak last year; a broad-based index is down almost 30%. What’s going on? Part of the answer has to do with the dollar’s status as a reserve currency. The US is doing better than the rest of the world, so interest [...]

Golden Fetters?

By | 2017-07-17T12:22:20+00:00 November 24th, 2015|Global Market Update|

Every few years someone suggests we return to a gold standard. Source: Pixabay It’s an election year, so discussions about money, the Fed, deficits, debt, and the gold standard are bound to come up. For millennia gold served as medium of exchange, unit of account, and store of value. As the densest material in the world, it’s fairly easy to determine its purity. Politicians often suggest tying the currency to something—in order to restrain the government’s ability to print money at will. But economists [...]

Unemployed?

By | 2017-07-17T12:22:20+00:00 November 23rd, 2015|Global Market Update|

What causes unemployment? Unemployed men outside soup kitchen. Source: Wikipedia The unemployment rate is falling. It’s down to 5%--half of what it was during the recession in 2009. Most economists consider 5% the natural rate of unemployment—the rate that accommodates a dynamic, changing economy, where employers hire and fire and where people change jobs. With the rate falling and wages rising, it looks like the Fed is about to raise interest rates for the first time in over 8 years. Unemployment Rate. Source: Bureau [...]

Stock-Bagging

By | 2017-07-17T12:22:20+00:00 November 20th, 2015|Global Market Update|

Why do people climb mountains? Photo: T. Nichols. Source: Morguefile 90 years ago British climber George Mallory famously answered: “Because it’s there.” It could be for the challenge to body, mind, and spirit that mountains represent. It could be for the exercise and fresh air. Or it could be for the status. A couple of journalists have been cataloging Himalayan expeditions, and their data provide evidence that people do climb for the bragging rights. Over the years, there have been over 1000 expeditions to [...]

Your Brain on the Market

By | 2017-07-17T12:22:20+00:00 November 19th, 2015|Global Market Update|

Can we think our way to better performance? “The Thinker,” Rodin Museum, Philadelphia. Photo: Andrew Horne. Source: Wikipedia There’s an enduring misconception that we only use about 10% of our brains, that if we could tap into our unrealized potential we could learn new languages, solve complex math problems, and bend spoons with our minds. In fact, this notion is the basis for a popular recent movie, “Lucy,” in which the lead character unlocks her hidden mental reserves and does incredible things. In fact, [...]

Getting Fed Up

By | 2017-07-17T12:22:20+00:00 November 18th, 2015|Global Market Update|

Getting Fed Up What is the Fed? Photo: Tania Thompson. Source: Shutterstock For most people, the Federal Reserve is this mysterious place that makes mysterious announcements and that tells the banks where to set interest rates. Academics and politicians may rail at the Fed for various reasons, but their debates often sound like medieval scholastics debating how many angels can dance on the head of a pin: interesting but irrelevant. The Fed is an essential part of our financial infrastructure—the banker’s bank—that keeps things [...]

Predator/Prey Model

By | 2017-07-17T12:22:20+00:00 November 17th, 2015|Global Market Update|

What’s a shareholder activist? Photo K Connors. Source: Morguefile An activist is someone who takes a stake in a company to put public pressure on management to change its approach. Activist goals can be financial, social, or governance-driven. Common objectives might be increasing dividends and share buybacks, reducing excessive management salaries, or disinvestment from particular countries or activities. 25 years ago these folks were called corporate raiders, forcing management to take action or buy them out, often at a fat premium to the current [...]

Long in the Tooth

By | 2017-07-17T12:22:20+00:00 November 16th, 2015|Global Market Update|

Long in the Tooth Are FANGs leading the market? Photo: Gyöngyvér Fábián. Source: Pixabay Over the past year, the stocks have struggled. Fears about global growth, about China, about a strong dollar, about weak commodity prices have held them back. Year-to-date, the stock market is essentially flat. But four stocks have stood out: Facebook, Amazon, Netflix, and Google. So far, each of these stocks is up 40% or more; Netflix and Amazon are up over 100%. An equal-weighted portfolio of these FANG stocks, as [...]

Strategy and Tactics

By | 2017-07-17T12:22:20+00:00 November 13th, 2015|Global Market Update|

Strategy and Tactics What’s the difference between investment strategy and investment tactics? Photo Chil Khakham. Source: Morguefile Strategic investing is investing for long-term needs. It looks at the world in terms of structures and institutions, and invests in those areas that respect property rights, the rule of law, and that allow capital to flow freely. It understands that small companies, troubled companies, and junior claims on cash flow are more risky, so their returns are more volatile. But if the investor is able to [...]