I’m sorry to inform investors out there – the stock market doesn’t happily bounce back to historical averages on a regular basis.
I hear a lot of “academic” sounding arguments that predict the direction of the market based on its “valuation metrics” – also called its “multiple.” It sounds so learned and so well founded. After all, aren’t we talking about the “fundamentals” – earnings vs. price, the non-emotional way to invest.
Too bad none of this works, and ...
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My mammalian brain is not immune to the foibles of bad financial thinking.
But thankfully I have the experience to catch myself making thinking errors, which happened today over a restaurant stock.
My kids love Buffalo Wild Wings. My wife despises it. I love to take the kids there when she isn’t around.
It always seems to be packed. I am sure they have fat operating margins. You see new branches popping up all over the place.
I was going to ...
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Walking down 6th Avenue yesterday in New York, I ran into that “National Debt Counter” we have seen so many times in the news.
As I walked by I noticed that it breaks down the national debt into a per-person amount, which was $148,763.
The per-person statistic particularly caught my attention. Why? One person’s debt is another person’s asset. What if you were told that, on average, there are $148,763 per US citizen of government guaranteed assets out there ...
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I did quite a bit of sight seeing in New York today. Unfortunately Alexander Hamilton’s grave was under restoration. Above is a photo of the Trinity Church where the grave is located, and below is a photo of the grave, taken by someone else.
In a way, this ties back to the first post of this blog. The first post referenced the place where Hamilton was born. ...
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I’ve been getting some question and comments about Eugene Fama being awarded the Nobel Prize.
Here are some links to videos that further explain Fama’s career and his contributions to finance.
Two short videos on the evolution of finance and Fama’s career
American Finance Association interview with Fama from 2008
No it won’t. And I lose exactly zero sleep over this.
I want to make something clear. It is absolutely, unarguably inevitable that the dollar will lose its status as the world’s reserve currency….someday.
This is not a condemnation of US policy or a prognostication of doom. It is just inevitable. Nothing lasts forever. Not even our planet.
When the US dollar will lose its dominant status is much more debatable. Is it going to happen six months from now!!!! or ...
More →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 in these ...
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Paul Krugman recently wrote a short post “Don’t Feed the Trolls,” in which he explains why he doesn’t continually respond to Niall Ferguson’s attacks. Basically Krugman says that continually responding to the attacks is a waste of time and serves to feed the other side.
Good point. Actually it is a great point. With all the mud slinging that goes on in the blogosphere, you really have to pick and choose what ...
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“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 to clarify ...
More →It was announced today that Eugene Fama, Robert Shiller and Lars Hansen would share the Nobel Prize for economics. I don’t think you can appreciate Fama’s receipt of this prize unless you understand his career history going back to the 1960s.
Krugman doesn’t get it
Paul Krugman, who is astute in his particular branch of macroeconomics, is a little deficient when it comes to the ...
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