Cullen Roche: Pragmatic Capitalism

Financial professionals love to talk about beating the market. I won’t bore you again with why this is the wrong mindset for most people when they allocate their savings. In fact, I want to discuss how underperforming is sometimes a good thing. I’m in the 8th inning of a home remodel that turned into an almost entirely new rebuild of the home. It’s been three years in the making. It has, at times, consumed every ounce of my mind and body. Funny thing is, real estate listing websites say...

Here are some things I think I am thinking about: 1) Scandinavia really isn’t Socialist. I got a lot of emails over the weekend about my piece on Socialism and Capitalism. One of the common themes was about how “Socialist” Scandinavia is. This is a tired old myth. Scandinavian countries are predominantly Capitalist with an average of about 33% of wealth owned by the state.¹ Some are quite high (like Norway at 56%) and some are quite low (like Denmark at 12%). But even countries like Norway...

I am going to spend some time trying to put the debate about Capitalism and Socialism into perspective here. But before we can do that I need to properly define the terms because they’re used in a rather lazy manner in the mainstream media. So, let’s establish some understandings: Capitalism – a system in which the means of production are privately owned and the economic benefits of that production are distributed by the owners and regulated by the government. Socialism – a system in which...

Someone emailed me this Tweet about MMT asking whether I thought it was accurate or not: Okay. Disclaimer – I like a lot of what MMT says. But they take this funding narrative too far and I think it discredits their other more important narratives. This Tweet gets to a pretty fundamental problem in the MMT narrative. MMT people like to say that taxes don’t fund government spending and that the government doesn’t need income to spend. This is wrong in a rather basic sense. After all, in...

Banks aren’t magical money trees. But banks also create money more independently of Central Banks than most economists think.  So, there was a big blow up in economic circles last week when David Graeber published this piece basically claiming that mainstream economics is a mess that needs to be blown-up and totally overhauled. My personal view is that laypeople tend to go overboard with these criticisms of economics. They’re usually empty nonsense like “but economists didn’t predict the...

Here are some things I think I am thinking about: 1) Tesla broke some windows. The unveiling of the Tesla Cyber Truck was a smash. Literally. They installed bulletproof windows on the truck and somehow didn’t properly test the vehicle’s ability to sustain damage before doing a live demo in which they busted the window with a small bowling ball. It perfectly summarized what appears to be a flop of a product unveiling. I am not gonna lie – this really disappointed me. I have no stake in...

Here are some things I think I am thinking about today: 1) Hello, 9-1-1: I’d like to report a mass murder. Here’s a JP Morgan note that has been going around twitter the last 24 hours. I don’t have much to say here other than this – most of the people on this list have a few things in common – political bias and/or a permabear bias. So, don’t be biased or one day you might end up on a list like this getting carried out in a body bag. (Thoughts and prayers – image via @nickatfp) 2) Here’s...

I am a big fan of looking at things through the lens of the sectoral balances. For instance, I sometimes post this chart on this website which depicts the government’s balance vs the non-government. (This is a stupid chart without a lot more context) It’s a decent (though incomplete) depiction of the private sector’s balance versus the government’s position and it’s helpful to understand because, mainly, if you believe the private sector is too heavily indebted, then the government’s...

Here are some things I think I think about Ray Dalio’s provocative piece titled “The World Has Gone Mad and The System is Broken”. So…Ray Dalio wrote a short piece that is getting A LOT of attention. It basically implies that asset prices are insanely overvalued and the markets are due for a big “paradigm shift”. I think he makes some cognizant points, but I also don’t agree with the basis from which he makes some of these points. Let’s see if I can explain: 1) Are Central Banks “pushing...

I’m a permaeverything. Not a permabear. Not a permabull. A permaeverything. What the hell does that mean? It means I try to always maintain a relatively balanced exposure across my financial assets. I am never too heavily leveraged to stocks. Never too heavily leveraged to bonds. Never too heavily leveraged to cash. I am balanced. I am permanently bullish AND bearish about everything to some degree.  The Permaeverything mentality is essentially a type of Permanent Portfolio or All Weather...