Greece Not a Surprise to Some

Three days ago Greece seemed split on the referendum. The results, however, showed the “No’s” won by a wide margin. On July 4th I was told, by someone who is pretty knowledgeable about history, that the Greeks would probably vote “No.”

His reason was that “No” is the same response the Greeks gave Mussolini at the start of WW2 – another time in history when the Greeks felt bullied by larger European neighbors. The connection seems ...

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Do Higher Interest Rates Mean Better Return?

Many investors are frustrated with low interest rates, but the actual (real) return is not as bad as they think.

We’ve all heard the complaints. Interest rates are at historic lows, which frustrates many investors that want income, especially from low risk investments such as CD’s, money market funds or high grade bonds.

Interest rates on low risk investments have been near zero for several years now. Many investors are remembering the old days when government bonds ...

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Last 20 years – How Discipline Can Breakdown

Two keys of investing:

1. Pick smart investments to start with

 2. Stay disciplined

Discipline is a lot harder than it seems.

Let’s take a look at a mutual fund, DFA US Small Value (DFSVX) vs. the S&P 500 over the last 20 years. The fund’s return….12.75% annualized. Your money would have grown over 10 times if you just stayed put, despite crashes in 2000 and 2008.

S&P vs DFSVX since 1994 More →

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Fama and Shiller on Financial Bubbles

NPR interviewed Fama and Shiller on financial bubbles.

This is fairly well done and worth a listen. Generally the financial media completely screws up stories and interviews, but this one actually gets down to the real subject at hand.

You can listen by clicking here.

Notice that Shiller dances around when he is asked direct questions about how to define a bubble. He still can’t really do it.

My favorite quote from ...

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The Dow, IBM, and Benchmarking

The Dow Jones Industrial Average (DJIA) is a bizarrely calculated index . If most people understood how it was calculated, they wouldn’t follow it anymore.

Yesterday happened to be one of those days when the Dow was down (-0.01%) but the S&P 500 was up (+0.67%). This was primarily due to two stocks in the Dow, IBM and Goldman Sachs, which were down a lot, -6.37% for IBM and -2.42% for Goldman Sachs.

Why would the drop ...

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Grandfathers of the Efficient Market Hypothesis

“Eugene Fama is widely considered the father of the efficient market hypothesis.” 

….If I had a nickle for every time I’ve had to read this line in the last 24 hours….I might have $1.20 by now.

Yesterday it was announced that Fama would be awarded the Nobel Prize in economics. Virtually every media outlet has described him as “The father of the efficient market hypothesis.”

I want ...

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Debt Limit Debate is as Old as the Country

These two just won’t stop fighting.

Over two hundred years since Hamilton got himself killed, I can hear Jefferson and Hamilton continue to fight via the words and arguments being tossed out over the debt limit. Mostly I hear Jefferson coming from the camp that is contemplating whether or not it would be a “big deal” if we ran up to the limit. Answer: Yes, it would be terrible.

I am horrified by the casualness with which they ...

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Harry Binswanger Hijacks Real Capitalism

Harry Binswanger is completely misguided in his article that the 99% should give back to the 1%. His argument is not that we should have a less progressive tax, not that we should have a flat tax, not even that we should have regressive tax, but that “anyone who earns a million dollars or more should be exempt from ...

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