Rumors of War

By | 2017-07-17T12:21:18+00:00 May 31st, 2017|Global Market Update|

What happens when an irresistible force meets an immovable object? Map: US Army. Source: Wikipedia That’s an old philosophical question. The answer, of course, is that no force is really irresistible and no object is truly immovable. But when they seem that way, spectacular conflict can be the result. That was the case during the 5th century BC in Greece. Sparta had been the dominant power in Greece. They had a militant, military culture built around their army. Athens was a rising power. It [...]

Modern Portfolios

By | 2017-07-17T12:21:18+00:00 May 30th, 2017|Global Market Update|

What’s the best way to put a portfolio together? Photo Andrijko Z. Source: Wikipedia Modern Portfolio Theory was born in 1952, when Harry Markowitz published his famous (and first) paper, “Portfolio Selection.” He won the Nobel Prize for his insight, which incorporated risk as a critical element of investment portfolio design. The key insight is that an asset’s risk shouldn’t be assessed in isolation, but in the context of how it contributes to a portfolio’s overall risk and return. Return is easy to calculate. [...]

Roses for Education

By | 2017-07-17T12:21:18+00:00 May 26th, 2017|Global Market Update|

Will education solve our problems? Photo Viktor Hanacek. Source: Picjumbo Economists of all stripes trumpet education as a key to improving economic outcomes. Whether it’s literacy, math skills, or the ability to write computer code, our society has become so technological, they state, that an extensive – and expensive – education is necessary to thrive in today’s world. This is nothing new. Education has been considered crucial to society since Plato wrote The Republic 2400 years ago. In fact, he thought that a complete [...]

The Challenge of Patience

By | 2017-07-17T12:21:18+00:00 May 25th, 2017|Global Market Update|

We live in an impatient world. Photo: Mariordo. Source: Wikipedia After running our phones down to 1%, we plug them in and expect them to be fully charged in a few minutes. We get frustrated when a webpage takes longer than three seconds to load. We would rather use the microwave than wait for the oven to pre-heat. And if youre going too slow in the left lane well were probably not friends any more. Our culture lionizes speed: the instant celebrity, fast cars [...]

The Ethics of Nudging

By | 2017-07-17T12:21:18+00:00 May 24th, 2017|Global Market Update|

Is it ethical to nudge people? Photo: Polar Cruises. Source: Wikipedia “Nudging” is all the rage. A nudge is structuring someone’s choice so they make the “right” decision. For example, putting fruit at eye-level in a cafeteria is a “nudge” towards healthy eating. Banning junk food and sugary sodas is not. That’s coercion. Participating in Social Security – at least paying into it – isn’t a nudge, it’s part of our Federal tax system. But the default settings on a 401(k) plan are nudges. [...]

Buying Back the Future

By | 2017-07-17T12:21:18+00:00 May 23rd, 2017|Global Market Update|

Are stock buybacks a good idea? Photo Viktor Hanacek. Source: Picjumbo When companies generate extra cash, they can do four different things with it. They can invest in their own business, through capital expenditures, they can invest in another business, via mergers and acquisitions, they can pay dividends to shareholders, or they can buy back their own shares. Investors tend to like dividends and buybacks. It puts money in their pockets, rather than sitting in the corporate treasury. When excess cash builds up, there’s [...]

Risk, Reward, and Valuations

By | 2017-07-17T12:21:18+00:00 May 22nd, 2017|Global Market Update|

Risks, Rewards, and Valuation Is the stock market risky? Photo Rhett Sutphin. Source: Wikipedia Of course it is. Anyone who went through the Financial Crisis or dot-com crash or Long Term Capital crisis or ’87 crash has experienced the gut-wrenching feeling of having significanlty less in savings than they had just a few months before. Nobody likes that feeling. And the longer you hold onto stocks, the more likely you are to experience a bear market. These can be caused by wars, recessions, panics, [...]

Making Stuff Happen

By | 2017-07-17T12:21:18+00:00 May 19th, 2017|Global Market Update|

Where have all the manufacturing jobs gone? Old shoe factory, Columbus, OH. Photo: Nytend. Source: Wikipedia Since 1989, manufacturing employment in the US has plunged by 6 million workers – over 30%. But this doesn’t mean the US has stopped making things. Employment has fallen, but output – after a setback during the recession – has continued to grow. In fact, the output of stuff made in the US – cars, engines, advanced machinery – is currently near an all-time high. Source: St. Louis [...]

Dancing With Giants

By | 2017-07-17T12:21:19+00:00 May 18th, 2017|Global Market Update|

Will the big software giants eat the world? Big Five market cap. Source: The Atlantic Everyone is buzzing about the big five: Apple, Google, Microsoft, Amazon, and Facebook. Ten years ago, their combined market cap was just under $600 billion. Now it’s almost $3 trillion – a five-fold increase, or 16% per year. This was more than twice the general US market’s return, and three times to global market. This, in a nutshell, is why active portfolio managers are struggling to keep up with [...]

Drugs, Drones, and Hats

By | 2017-07-17T12:21:19+00:00 May 17th, 2017|Global Market Update|

Can drones be used to smuggle drugs? Photo DB. Source: Wikipedia It sure looks like it. In 2015 guards rushed to break up a mob in an Ohio prison yard. When they reviewed a security tape, they saw that a drone had flown in and dropped a package containing tobacco, pot, and heroin, which the inmates were fighting over. Increasingly, drones are smuggling drugs, mobile phones, and even weapons into prisons at an alarming rate. Authorities are trying to respond, but this takes time. [...]