A Brief History of Bubbles

By |2017-07-17T12:21:40+00:00October 17th, 2016|Global Market Update|

What’s wrong with bubbles? Photo: Michelle DiNocola. Source: Morguefile Sir John Templeton once famously noted that the four most expensive words in the English language are, “This time it’s different.” It’s easy to get caught up in the excitement of the moment, to believe that the latest innovation will lead to a new era. But human nature doesn’t change. That’s why it’s so fascinating. Before the first documented financial bubble—the tulip crisis in 17th century Holland—there were other markets that were manipulated and distorted. [...]

Apples, Banks, and Money Management

By |2017-07-17T12:21:40+00:00October 14th, 2016|Global Market Update|

Can the market for apples teach us about money management? Photo: Arly Flo. Source: Wikimedia Like many people, I grew up with the saying, “An apple a day keeps the doctor away.” Apples are supposed to have all kinds of health benefits—from helping your digestion to reducing cholesterol to improving your memory. And—unlike a lot of healthy foods—they taste pretty good. But I was never really keen on apples. You see, when I was young, pretty much every apple looked and tasted the same. [...]

Insiders and Outsiders

By |2017-07-17T12:21:40+00:00October 13th, 2016|Global Market Update|

Insiders and Outsiders What’s wrong with insider trading? Photo: Massimo Mancini. Source: Unsplash Insider trading strikes most of us as deeply unfair. If a banker passes along a tip about an upcoming deal to his cousin, and the cousin uses the information to make a bundle, we know in our guts that this is wrong. But who’s the victim? If the banker didn’t receive any compensation for leaking the information, where’s the crime? Some legal scholars have questioned what’s wrong with insider trading in [...]

Cost, Price, and Value

By |2017-07-17T12:21:40+00:00October 12th, 2016|Global Market Update|

“A cynic knows the price of everything and the value of nothing.” Lady Windemere’s Fan, Oscar Wilde Photo: Napoleon Sarony, 1882. Source: Metropolitan Museum of Art Full disclosure: I am a financial professional who manages money. So my comments are slanted. After all, where you stand often depends on where you sit. And I sit where I can manage individual and institutional portfolios, using—mostly—individual stocks and bonds. I avoid using mutual funds because of the conflicts that are inherent in their business model. What [...]

More or Less

By |2017-07-17T12:21:40+00:00October 11th, 2016|Global Market Update|

What’s a mini-IPO? Photo: Dan Morgan. Source: Wikipedia A mini-IPO is a limited stock offering that doesn’t have to jump over all the regulatory barriers of a regular IPO. The new rule is known as Reg A+, and it’s part of the JOBS act—a measure designed to make it easier for companies to raise capital. When the rules took effect in June, almost 100 firms signed up right away. But so far, only a handful have actually sold any stock under the bill. It [...]

Flash Futures

By |2017-07-17T12:21:41+00:00October 7th, 2016|Global Market Update|

Are flash-crashes the future? Photo: Ostephy. Source: Morguefile We’ve seen flash-crashes in stocks and in bonds. It’s inevitable that they should spread to other asset classes. Early this morning the British Pound fell by over 6% in a few minutes. The exact magnitude of the fall is unclear, because the currency snapped back so quickly. One pricing service had it as low as 1.13 to the dollar, after opening the day around 1.26. It quickly came back to 1.23, a modest 2% drop. Over [...]

Trading Nations

By |2017-07-17T12:21:41+00:00October 6th, 2016|Global Market Update|

What effect does trade have on our economy? Diagram of US trade flows. Author: Tony Cohen. Source: Wikipedia Of all the issues raised in the current political season, surely the most overrated has been free trade. To hear the candidates talk about it, you’d think the worst issue affecting our economy has been bad trade deals with Canada, Mexico, and China. While these three countries happen to be our biggest trading partners, trade just isn’t that big a deal in our economy. In the [...]

Re-Thinking Brexit

By |2017-07-17T12:21:41+00:00October 5th, 2016|Global Market Update|

Can uncertainty cause a recession? Source: Econlib Economists are always looking for ways to test their theories. They can’t put economies into test tubes and sprinkle a little stimulus on them—they have to look for natural ways to examine how people react economically to new conditions. So they study businesses right near a state border to see if changing the minimum wage law has much impact, or they use the draft lottery to study the effect of military service on lifetime earnings. The Brexit [...]

700 Billion Little Birds

By |2017-07-17T12:21:41+00:00October 4th, 2016|Global Market Update|

Could $700 billion create some moral challenges? Lady Justice. Source: Wikipedia In the midst of the financial crisis, Congress passed the TARP program—originally designed to buy troubled assets from banks, but actually used to provide additional capital to the banks. It didn’t buy CDOs-squared and mortgage-backed securities backed by NINJA-loans—mortgages to people with no income, no job, and no assets. Instead, the TARP program mostly bought preferred shares issued by banks, injecting capital directly into the banking system. Not every bank took TARP money. [...]

Our Fibers, Our Selves

By |2019-02-20T13:04:44+00:00October 3rd, 2016|Global Market Update|

What do our clothes say about us? Illustration from “The Penny Magazine,” 1843, Source: Wikimedia For millenia, clothes have inspired new technology. Cotton has been spun, woven, and dyed since prehistoric times. Marco Polo pioneered the Silk Road and the Age of Exploration. Spinning mills in England and New England were at the center of the Industrial Revolution. Demand for “Basic Black” fashions stimulated the chemical industry in the 20th century. Everyone’s excited by the latest smart watch or FitBit, but clothes are the [...]