Credo-ability

By |2018-01-31T06:30:21+00:00January 31st, 2018|Global Market Update|

Do corporate credos mean anything? Johnson & Johnson Credo. Source: Johnson & Johnson At its best, a corporate credo can provide inspiration and direction to help management focus when times are hard. Johnson & Johnson’s credo is a great example. It was written over 70 years ago by Chairman Robert W. Johnson himself, just before the company went public, and it’s chiseled in granite in the entrance to the corporate headquarters. It lays out Johnson’s commitment to the firm’s customers, employees, communities, and shareholders. [...]

Inflation Liftoff?

By |2018-01-30T07:26:17+00:00January 30th, 2018|Global Market Update|

What’s up with inflation? Photo: Eric Ward. Source: Wikimedia The short answer is, nothing. The latest inflation numbers show that the Consumer Price Index grew 2.1% last year, the same as the year before. Core prices grew slightly less. Inflation has averaged around 2% for the last 20 years. In fact, the last time we had a significant increase in inflation was the late 1980s, when core inflation moved up from 4% to 6%. That prompted the Fed to raise rates from 6% to [...]

Balancing Act

By |2018-01-29T07:22:36+00:00January 29th, 2018|Global Market Update|

How often should we rebalance our portfolios? Photo: Alberto 1412. Source: Wikimedia Many people have balanced portfolios. And it’s a good idea to divide our assets between stocks, bonds, real estate, and cash. You never know what’s coming up next. But when one asset grows or shrinks a lot compared with the others, our portfolios can begin to look out of balance. When should we even things up? Rebalancing a portfolio is generally a good move. It forces us to sell assets that have [...]

Time to Wake Up?

By |2018-01-25T06:18:56+00:00January 25th, 2018|Global Market Update|

When does your alarm go off? Illustration: Sun Ladder. Source: Wikipedia Henry David Thoreau once wrote, “The mass of men lead lives of quiet desperation.” Today, he might say, “Most people are asleep.” In the early 19th century folks had to fight just stay alive: to feed, clothe, and keep themselves and warm and dry. Today, life isn’t so grim. We don’t struggle with starvation any more. Indeed, most of our diseases are ones of overabundance, not scarcity. So, many of us just doze [...]

Into the Light

By |2018-01-24T05:40:06+00:00January 24th, 2018|Global Market Update|

What’s the underground economy? Photo: Melony Candia. Source: Morguefile The informal economy is the cash economy. It’s the economy of under-the-table transactions, of digital currencies and returning favors. Sometimes it’s unsavory, sometimes not. If you read a new book that you like and loan it to a friend, that’s informal activity. No money changes hands. This is perfectly legitimate. But sometimes informal activity is sleazy: cash payments for goods or services so sellers can avoid reporting what they do – to avoid paying taxes, [...]

STEMing Our Jobs

By |2018-01-23T06:57:41+00:00January 23rd, 2018|Global Market Update|

STEMing the Job Market Do we need more STEM students? Lunar Landing Research Vehicle in flight. Source: NASA That’s what a lot of people think. And as a science major myself, the husband of a science major, and the father of four science majors (so far), I certainly believe in the utility and importance of studying science in college. It helps students develop many important skills. But some proposals to provide special encouragement for kids to study science seem misguided, like college-loan forgiveness or [...]

The Power of the Edge

By |2018-01-22T07:40:23+00:00January 22nd, 2018|Global Market Update|

Borders are important. Mobius strip. Photo: David Benbennick. Source: Wikipedia I live in a border town. Hanover, New Hampshire lies directly across the Connecticut River from Vermont. Up and down the river, there’s a lot more development on the New Hampshire side of the Connecticut than on the Vermont side. This didn’t used to be the case. 150 years ago, villages on one side of the border were just as big as the other side. And Vermont – with a railroad line running along [...]

Shakespeare and Tax Reform

By |2018-01-19T07:02:04+00:00January 19th, 2018|Global Market Update|

What we call things is important. Photo: Victor Hanacek. Source: Picjumbo How items are defined can have real-world implications on how they’re treated. Consider the latest changes in the tax code. Individuals can now only deduct up to $10,000 of the State and local taxes they pay. So high-income people in high-tax states like New York, California, and Vermont could end up paying more on their Federal income taxes than they would if they lived in a low-tax state like Florida or Texas. Naturally, [...]

The Beauty of Simplicity

By |2018-01-18T06:50:48+00:00January 18th, 2018|Global Market Update|

Simple rules beat complex algorithms. “Sunrise Over the Eastern Sea” by Fujishima Takeji. Source: Google Cultural Institute There’s something deeply relaxing about great art. It draws us into the artist’s vision, and communicates a world view without tying us up in endless speculations. The greatest works of art seem to accomplish this effortlessly: the Mona Lisa’s inscrutable smile; the Sistine Chapel’s celebration of the classical beauty of our human frame; Monet’s lilies in their reflecting pool. They call us to deeper reflection, ourselves. How [...]

Efficient Market Thinking

By |2018-01-17T07:28:37+00:00January 17th, 2018|Global Market Update|

Are markets efficient? Photo: Ralf Roletschek. Source: Wikimedia Commons. CC-BY-SA 3.0 When I was studying finance, one of the most hotly debated notions was the Efficient Market Hypothesis. It’s like salsa: in comes in mild, medium, and strong forms, and everyone has an opinion – they like it, they hate it, they base multi-billion dollar businesses on it. At its heart, the Efficient Market Hypothesis says that markets incorporate information into their pricing mechanism. It’s hard to argue about that. But it gets more [...]