Cullen Roche: Pragmatic Capitalism

Brad Delong has written a piece in Project Syndicate that I find to be unfairly critical of Ben Bernanke.  Specifically, Delong writes: “In 2000, Bernanke had argued that a central bank with sufficient will could “always,” in the medium term at least, restore full prosperity via quantitative easing. If a central bank printed money and bought financial assets on a large-enough scale, people would begin to step up their spending. “ I don’t think this is quite true though.  In a 2002 speech,...

Today’s FOMC statement left rates unchanged, but the focus is on the removal of the section on global uncertainty.  If you recall during the last meeting there was a good deal of focus on emerging markets and global uncertainty.  And rightly so.  No one, and I mean no one, knew how China’s economic weakness was going to filter through the world.  At points it looked like we could be on the verge of a 2008 repeat.  The Fed responded in a very prudent manner by keeping rates unchanged and...

Sorry for the radio silence over the last few days, but I spent my weekend competing in the Ironman Cabo event.  It was a torture fest in 90 degree weather across 2.4 miles of ocean, 112 miles of biking (oh, with 7500 feet of climbing – that’s about a quarter of Mt Everest for those keeping tabs) and then we ran (well, walked a lot in my case) a marathon.  It looks like 35-40% of the field didn’t finish and I only made the cutoff time by an hour or so (16 hours).  So let’s just say I’m...

Just passing along a very good piece from analysts at JP Morgan on myths about US government debt.  These will all sound familiar to regular readers, but it’s important to emphasize given the fears in the mainstream media and the upcoming debt ceiling debate.  US government bonds have been tremendous performers over the last 20 years even as many of these myths have grown in popularity.  Unfortunately, these myths keep many investors from allocating assets to this important asset class. Go...

Michael Pettis has a post about endogenous money in which he challenges the idea that banks and governments can create demand from “thin air”.  This is a concept that has grown in great popularity over the years thanks in large part to internet discourse, but it’s also become quite confused at times due to differing views on endogenous money.  Pettis does a nice job covering much of that confusion which stems from the way Steve Keen has depicted the ideas over the years.  I like Keen and...

NB – I have been unfairly general with the term “hedge fund” and “banker” in this piece and I hate myself a little bit (just a little bit) for doing that.  Sorry in advance.   It’s fashionable these days to hate on bankers.  And at the same time it’s glamorous to be a venture capitalist.  Which is weird because these businesses are extremely similar.  For instance, I was amused by the recent ranting of a venture capitalist on Twitter who was criticizing the “usurious” fees that banks charge...

With interest rates at record lows and relatively rich fixed income valuations across many sectors the bond market is becoming an increasingly tricky place to navigate.  As a result I find myself researching new ways to squeeze returns out of this segment of the market on a near daily basis.  Increasingly, I feel like I am squeezing blood from stones. One place where that blood is becoming increasingly difficult to squeeze is in the mortgage backed securities market which has been a...

It’s no secret that I think most investors should index.  To be more precise, I’d call most “investors” savers.  And if you’re treating your portfolio as if it’s your savings then your financial goals are pretty simple: 1) outpace inflation and 2) reduce the risk of permanent loss.  You don’t need to “beat the market” or just maximize returns.  The best way to achieve these two goals is to implement a diversified, low fee and tax efficient portfolio. Given all that, indexing is the obvious...

You won’t find many investors with an all encompassing market understanding like Leon Cooperman.  He’s one of the only investors I know of who has a truly comprehensive micro and macro perspective.  In fact, his views on value investing combined with a macro approach are so well thought out that I find myself questioning my own top down approach every time I hear Cooperman speak.  You should check out his interview with Barry Ritholtz if you haven’t listened to it. I tuned into Bloomberg for...

Tonight’s Mets vs Dodgers game is going to be an interesting one.  The playoff series is tied 1-1, but game 2 was decided in a controversial manner.  Chase Utley was on first base with 1 out in the seventh inning and a man on first.  The batter hit a ball up the middle where the Mets looked like they might turn a double play (ending the inning and scoring threat).  Instead, Utley left the base path and slid into Ruben Tejada breaking up the double play and subsequently leading to a 4 run...