Big Bad Stories

By |2019-03-18T06:15:17+00:00March 18th, 2019|Global Market Update|

Are some myths dangerous? Paul Bunyan and Babe. Photo: Mike Baker. Source: Wikipedia Growing up, I read about the legendary lumberjack Paul Bunyan, and his faithful ox, “Babe.” They did amazing things, like create Minnesota’s 10,000 lakes, the St. Lawrence River’s 1,000 islands, and dig Lake Superior as a watering trough. The stories were a benign piece of folklore, a bit of boosterism about Americans settling the frontier in the 19th century. But some stories are dangerous. They shape the way we look at [...]

Flower Power Investors

By |2019-03-15T11:33:46+00:00March 15th, 2019|Global Market Update|

Remember the “Flower Children”? Photo: Rex Boggs. Source: Flikr. CC-BY-2.0 “Flower Power” was a movement in the mid and late ‘60s, part of the anti-Vietnam War movement. It was rooted in nonviolent ideology to transform war protests into peaceful spectacles. Young people embraced the flower-symbol by dressing in flowery clothes and decorating their vehicles with flowers and vibrant colors, wearing and singing about flowers in their hair, and distributing flowers in all kinds of situations, sometimes as a way to respond to potentially violent [...]

Hot Pepper Economics

By |2019-03-14T06:14:03+00:00March 14th, 2019|Global Market Update|

What do we do when prices go up? Source: Wikimedia. CC-BY-2.0 We usually switch what we buy, if we can. If the price of cayenne pepper doubles, we try substituting chili powder. If Ford tries to jack up the price of its Expedition, sales of Chevy Suburbans go up. Substitution is what keeps our finances stable even when the prices of various household items double or fall in half. It’s also why the explosive growth of big box retailers in the ‘90s or online [...]

Data, Data, Data!

By |2019-03-13T06:40:33+00:00March 13th, 2019|Global Market Update|

The 20th century was defined by the nuclear weapons and nuclear power. Will the 21st century be defined by “big data”? Thermonuclear blast, 1954. Public Domain. Source: Wikimedia, Department of Energy The 20th century began, conceptually, when Albert Einstein published his seminal paper on relativity. The intellectual revolution from this led to E = mc^2, nuclear energy, and the atomic bomb. Nuclear weapons revolutionized war, diplomacy, geopolitics, and – to a lesser extent – electric power, although a nuclear reaction is a pretty inefficient [...]

Diversifying Convenience

By |2019-03-12T13:03:03+00:00March 12th, 2019|Global Market Update|

Have you been to a convenience store lately? Photo: Igor Oskyonnov. Source: Fancycrave. CC0. The breadth of offerings boggles the mind. There’s dozens of types of candy, beef jerky, chips, and cigarettes, coffee, milk, sports drinks, sodas. Often there’s a small hot area where you can buy pizza slices or hamburgers or hot dogs. The diversity of product is a way for the owner to entice us out of our routine and into a purchase. Surely there’s something there we crave: sweets, salt, caffeine, [...]

European Mud Season

By |2019-03-11T08:57:12+00:00March 11th, 2019|Global Market Update|

Is Europe stuck in the mud? Photo: Stephen West. Source: Wikimedia In New England we’re about to enjoy mud season, that period in late winter and early spring where the roads can become impossible to manage. During the day, the frozen roads thaw from the surface on down, and all the water from melting snow seeps into the thawed layer. Then the road freezes again overnight. The repeated freezing and thawing allow the saturation to migrate deeper and deeper into the soil. The result [...]

Considering Our Options (Part 5)

By |2019-03-09T07:20:56+00:00March 9th, 2019|Global Market Update|

Can options explain strategy? Option play in football. Source: Wikimedia. Public Domain. Options are choices. Strategy is acting out our choices. When a company chooses to lay off workers and focus on their online platform, they’re exercising a real, strategic option. When investors exercise protective puts on S&P 500 futures, they’re exercising financial options. When a professional “dresses for success” and chooses between flats and heels, they’re exercising a personal option. Investment strategies can be explained with options as well. Two of the most [...]

Your Brain on Investments

By |2019-03-08T10:05:36+00:00March 8th, 2019|Global Market Update|

Why do our brains make it so hard to invest? Photo: Raman Oza. Source:Pixabay Thinking is hard work. Concentrating hard on a difficult task drains sugar from key parts of the brain. Usually, we use shortcuts to help us make decisions. We draw pictures; we remember past experiences; we tell ourselves stories to explain the data. Most frequently, we engage in wishful thinking. We look for facts to confirm our prior assumptions, rather than letting the information speak for itself. After all, we’re [...]

Considering Our Options (Part 4)

By |2019-03-07T05:31:35+00:00March 7th, 2019|Global Market Update|

Can options help us understand other investments? Source: They sure can! Remember that options are choices: the right, but not the obligation, to do something, usually buying or selling. When you combine options with other investments, or options with other options, you may get a combination that helps you make some sense out how an investment strategy might work.. First, we need a quick course on option pricing. An option price has four major components: the underlying stock’s price, the strike or exercise [...]

Considering Our Options (Part 3)

By |2019-03-05T20:19:54+00:00March 5th, 2019|Global Market Update|

Where do we find options in our everyday lives? Photo: William S. Farrow. Source: US Army Options are choices. They represent the ability, but not the obligation, to buy or sell something. Financially, we know that options are complex instruments that have strike prices, an implied leverage and time-decay. They’re priced according to a complex formula that only folks with high-powered math or finance degrees really understand. But they show up in all kinds of unexpected places. Take mortgages, for example. Most of us [...]