Theory of Everything?

By | 2017-07-17T12:22:08+00:00 February 12th, 2016|Global Market Update|

What’s going on? Higgs boson creation. Source: CERN The “Theory of Everything” was a sweet biopic that came out about a year ago. It’s about how physicist Stephen Hawking and Jane Wilde fell in love in the ‘60s, and how their relationship galvanized him to move forward in his academic career even as his body collapsed. The title is a word-play on the search for a grand unified theory in physics, a single, coherent theoretical framework that could fully explain all the physical forces [...]

A View from the Beach

By | 2017-07-17T12:22:09+00:00 February 11th, 2016|Global Market Update|

Why should we diversify? Photo: Petr Kratochvil. Source: Public Domain Pictures The reason to diversify is simple in some ways. Don’t put all your eggs in one basket, because that basket may fall. Spread things out—you don’t know what disaster lies ahead. And the math of diversification is pretty straightforward: your average risk is the average of all your asset returns, but volatility goes down based on how uncorrelated those assets are. If one stock zigs when the other zags, the overall portfolio is [...]

Private Markets and Public Innovation

By | 2017-07-17T12:22:09+00:00 February 10th, 2016|Global Market Update|

Is the rise of private equity stifling our productivity and competitiveness? Domenichino, “The Virgin with the Unicorn. Source: Wikipedia 20 years ago entrepreneurs all wanted to go public. The stock market was a way to make yourself and your employees rich. Start a company, develop an innovative concept, grow sales and profits by enough, and the equity markets could reward you. At least, that was the dream. But now, companies want to stay private as long as possible. They don’t want the reporting requirements [...]

Super Bowl Silliness

By | 2017-07-17T12:22:09+00:00 February 9th, 2016|Global Market Update|

The Broncos won. Is it going to be a bear market? Photo: Stephen Luke. Source: Wikipedia Every year around this time someone trots 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 [...]

On the Ground Game

By | 2017-07-17T12:22:09+00:00 February 8th, 2016|Global Market Update|

The ground game is critical. Photo: Gabor. Source: Morguefile That’s what surprised me about Sunday’s Super Bowl. Both teams used a lot of time running the ball, trying to open up holes in the defense, pounding and grinding yards away from one another. As someone who grew up cheering for Fran Tarkington’s Vikings and rooting for the New England Patriots today, I expected shotgun formations and a lighting offense. Instead, we saw play after play dominated by running backs and rushing. Indeed, the only [...]

On The Lookout

By | 2017-07-17T12:22:09+00:00 February 5th, 2016|Global Market Update|

Are we headed for a recession? Photo: Dee Golden. Source: Morguefile The short answer is, nobody knows. Recessions happen with surprising regularity in an advanced economy, but predicting them is challenging. Stocks are down right now, and this has people worried that the economy will turn down and stocks will fall even further. After all, stocks lead profits which lead the economy. So the equity market is a leading indicator, but stocks have predicted 9 of the last 5 recessions. They fell dramatically in [...]

The Search for Security

By | 2017-07-17T12:22:09+00:00 February 4th, 2016|Global Market Update|

The Search for Security Where can investors find safety? Photo: Josh Rogan. Source: Morguefile The answer to this question is far from obvious. In the past fifteen years we’ve seen spectacular failures among both large and small companies: Lehman, Fannie Mae, Quicksilver. And even more companies have fallen dramatically in price and never recovered, like Citigroup or AIG. Now the entire energy sector may be downgraded. When the giants fail, where do you go for safe, blue-chip growth? The short answer is, there’s no [...]

Moby-Markets

By | 2017-07-17T12:22:09+00:00 February 3rd, 2016|Global Market Update|

“Thar she blows!” “Where away?” “Three points off the lee bow, sir.” “Raise up your wheel. Steady!” Illustration: I.W. Taber. Source: Wikipedia It’s easy to become obsessed. Melville’s famous novel Moby-Dick describes Captain Ahab’s obsession with a giant albino sperm whale. On a previous voyage, the white whale had bitten off Ahab’s leg, leaving him with a prosthesis. Ahab goes on a mission of revenge, casting his spell over the rest of the crew. His fanaticism robs him of all caution. In the end, [...]

Comfortable Shoes

By | 2017-07-17T12:22:10+00:00 February 2nd, 2016|Global Market Update|

What do you need to survive these markets? Photo: Louis Melancon. Source: Metropolitan Opera When Birgit Nilsson, a famous Wagnerian opera singer, was asked what was the secret to singing “Isolde”—a notoriously difficult soprano role—her answer was unequivocal: “comfortable shoes.” She had a point. The first act lasts well over an hour, and the lead has to be on her feet—singing—for most of that time. Wagner was tremendously demanding of his soloists. When investors face demanding times like the ones we are in, they [...]

Iowa Futures

By | 2017-07-17T12:22:10+00:00 February 1st, 2016|Global Market Update|

Is Iowa typical? Artist: Grant Wood. Source: Wikipedia Iowa enjoys a funny place in American culture. Home to the first-in-the-nation political caucus, the state is often derided as quirky and out of touch—unlike big-city dominated states like Minnesota and Illinois to the north and east. It’s true that the Des Moines metro area only contains about 20% of Iowa’s population, versus Minneapolis and Chicago that have over 2/3rds of their States’ people. It’s also true that the state has a small minority population, and [...]