Tag Archives: How Things Work

Share the post "Why Do Corporations Pay Dividends?" There is increasing chatter in recent years about share repurchases, dividends, corporate investment and the ideal way for firms to use capital.  But one question that economists can’t really agree on the answer to is why companies pay dividends at all?  As noted in an excellent Twitter conversation initiated by Matthew Yglesias, even great thinkers like Richard Thaler and Tyler Cowen don’t have good answers.  And even the legends in...

Share the post "Why are Treasury Bonds the Ultimate Safe Haven?" The last 10 years have exposed a very important reality for any global asset allocator – US Treasury Bonds are the ultimate safe haven investment.  For decades we have heard stories about how gold, silver, real assets or other types of financial instruments would serve as the “safe haven” investment during times of crisis.  Many of these stories were based on mythical ideas about the coming collapse of fiat money or the...

Share the post "There’s Nothing “Natural” About the Economy and the Financial Markets" At the most basic level, the entire economy and financial system is highly unnatural.  It is entirely made up out of thin air.  Stocks, bonds, cash, money – all of it is just a figment of the human imagination conjured up from nothing to try to reflect the state of what is.  In some ways the financial system and the monetary system is real as it reflects things in the real world that we transfer from one...

Share the post "The Importance of First Principle Thinking" I loved this interview with Elon Musk discussing a wide range of topics.  Of particular interest were his comments on first principle thinking.  First principle thinking is the formation of fundamental truths from which we can build understandings.  Musk has described what he means: “What reasoning from first principles really means is boiling something down to the fundamental truths, or what appear to be the fundamental truths,...