Home 2017-07-28T13:07:05+00:00

Luxurious Detention

By | November 6th, 2017|

What’s happening in Saudi Arabia? Saudi Emblem. Public Domain. Source: Wikipedia Over the weekend the Saudi government detained dozens of the country’s most powerful princes, military officers, businessmen, and government officials. Included in the sweep is prince al-Waleed bin Talal, one of the world’s wealthiest individuals, worth over $16 billion, by some reports. Also taken into custody were two sons of the late King Abdullah, [...]

Factoring the Future

By | November 3rd, 2017|

What is “Factor Investing”? Starshine 3 Satellite. Source: NASA Factor investing is a different way to slice and dice a portfolio. You may have a bond portfolio made up of Government, Corporate, and Foreign Bonds. But the returns they generate come from different factors: their length, their default risk, and the risk of their being called – their duration, credit, and convexity. In the same [...]

Bad News Bears?

By | November 2nd, 2017|

Do you want the good news or the bad news? Photo: Anthony Delanoix. Source: Fancycrave Most of us want to get the bad news out of the way, then hear the good news. After all, who wants to leave a meeting depressed and upset? But people delivering the news usually want to start with the good news. We may be anxious about have a conversation, [...]

Supersonic Profits?

By | November 1st, 2017|

Whatever happened to the Concorde? Photo: Steve Fitzgerald. Source: Wikipedia The Concorde was a grand experiment. Supersonic flight had proven practical and useful for military purposes. Why not extend the application for civilian use? Jet aircraft made it practical to cross the continent or an ocean in a single day. Cutting that time down to a few hours could be equally transformative, it was thought. [...]

Financially (in)Secure?

By | October 31st, 2017|

Is securitization good or bad? Photo: Kerstin Riemer. Source: Pixabay Securitization is a five-dollar word that leaves people scratching their heads. It’s been alternately described as the greatest financial innovation since double-entry accounting or as the worst banking product since the centralized call-center. Securitization is actually pretty simple: it takes ordinary bank loans and bundles them up into securities that can be sold to investors. [...]

Back to Average

By | October 27th, 2017|

Is moderation coming back? Public Domain. Source: Carpictures In the ‘50s and ‘60s, there were all kinds of car models out there: muscle cars, coupes, sedans, and bizarre models with big tail fins and wide front ends. But ever since the ‘80s, designs seem to have converged. When you drive down the highway, you see SUVs, pickups, and generic sedans, all with soft corners and [...]

It’s Cash Flow

By | October 26th, 2017|

What drives the stock market? Dow Jones Industrial Average, log scale. Source: Bloomberg In the short run, stock market returns are driven by buyers and sellers. More buyers than sellers drive prices up; more sellers than buyers push prices down. In the long run, though, the market is determined by how much cash companies give to their shareholders. This is the heart of any firm’s [...]

The Difficulty of New Ideas

By | October 25th, 2017|

Why is it so hard to do something new? Source: Coface.ch Anyone who has tried to introduce a genuinely new idea knows how difficult it is. Counterparties default, it’s hard to obtain funding, and in much of the world, it’s hard to start a new business. People are skeptical of something different. When Alexander Graham Bell’s brought his newfangled telephone to the President of Western [...]

Ahead of the Pack?

By | October 24th, 2017|

Ahead of the Pack? Do annual returns mean anything? Photo: Jade. Source: Morgufile College endowments have reported their annual returns for fiscal 2017, which ended on June 30th. In contrast to 2016, when schools struggled to break even, returns were quite strong. Grinnell College, in Iowa, had an 18.8% return – driven by a large allocation to public-market equities. Harvard, whose massive $37 billion endowment [...]