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

The Power of the Edge

By | January 22nd, 2018|

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 [...]

Shakespeare and Tax Reform

By | January 19th, 2018|

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 [...]

The Beauty of Simplicity

By | January 18th, 2018|

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 [...]

Efficient Market Thinking

By | January 17th, 2018|

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 [...]

Mercantilist Mistakes

By | January 16th, 2018|

What is mercantilism? Spanis seaport by Claude Lorrain. Source: Wikimedia Mercantilism is a national economic policy designed to maximize the accumulation of currency reserves through trade. It promotes government regulation of an economy to augment a nation’s economic power at the expense of rival national powers. When politicians complain about a nation’s trade balance, they’re looking at the world with mercantilist glasses. Mercantilism becomes more [...]

Winner and (Lesser) Winners

By | January 12th, 2018|

What is the corporate impact of tax reform? Public Domain. Source: Wikimedia The new tax law is on the books, and most people will be looking at their paychecks to see how the new rates will affect them personally. But the biggest impact of the law will be on corporate taxes. After all, going into 2017 there was a broad consensus that our highest-in-the-world corporate [...]

Juggling AIoT

By | January 11th, 2018|

What is Artificial Intelligence of Things? Photo: Xavier Caré. Source: Wikimedia Commons. CC-BY-SA 4.0 We know what artificial intelligence is. That’s when computer algorithms can beat us at checkers or chess, or help manage freight train traffic through Chicago. And people understand the internet of things, where a smart-thermostat talks to a motion sensor at home and turns down a room’s heat if there’s nobody [...]

The Confidence Gambit

By | January 10th, 2018|

Are people overconfident? Consumer Confidence Survey. Source: St. Louis Fed It’s an important question. Studies published over the years demonstrate that most people overestimate their abilities and their potential for reaching their goals. Julie Andrews illustrated this 60 years ago in the movie “The Sound of Music” when she sings “I have confidence.” The song makes an ironic point: her character’s confidence was wildly misplaced. [...]

The Future of Investing

By | January 9th, 2018|

Is active management doomed? Illustration from Dante’s Inferno by Gustav Dore. Source: Wikipedia In 1991 William Sharpe posited that active investment management would inevitably underperform passive management. He made two observations: 1). The returns on all active portfolios, in aggregate, would be equal to those of all passive portfolios; and 2). The higher fees that active managers charge would doom their portfolios, in aggregate, to [...]