Sunday , October 13 2019
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Tag Archives: Most Recent Stories

Three Things I Think I Think – Banning Billionaires and Other Stupid Ideas

Here are some things I think I am thinking about on this beautiful Wednesday before the Washington Nationals defeat the Los Angeles Dodgers¹: 1) Should we ban billionaires? Bernie Sanders says we should ban billionaires. It’s all part of the growing trend in the idea of wealth taxes that have become popular with some Democrats. It sounds like an okay-ish idea if you’re into progressive taxation, but it’s also an impractical idea that is predicated on misunderstandings. For instance, the...

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The Upside of Commission Free Trading

I hate short-termism and anything that feeds on it (financial news, get rich quick schemes, etc). It is, in my opinion, one of the most destructive aspects of any financial plan as it chews up taxes and fees thereby making the average investor more active and mathematically worse performing. Commission free trading feeds on this. It is essentially an incentive to trade more, as these trades, which are quite costly, are viewed as being cost-less. I bring this up as Schwab and Interactive...

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Three Things I Think I Think – Impeachable Ideas

This website is, to a large degree, about impeachment and impeaching bad ideas out of the worlds of finance and economics. So, here are some impeachable ideas I’ve been thinking about lately: 1) Market Cap Weighted Index Funds are “immoral”. WHAT? Here’s an article on MarketWatch where someone who runs a “socially responsible investment” firm says that owning a simple index fund is “immoral”. The basic argument is that owning things like gun makers or cigarette makers in an index fund...

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Three Things I Think I Think – Repo Madness!

Here are some things I think I am thinking about: 1.2.3. The Great Repo “Crisis” of 2019. If you’ve opened the financial section of the newspaper in recent days then you’ve probably been blasted in the face with lots of confusing jargon about a liquidity “crisis” in the repo market. This sort of stuff really bugs me because it’s a market that is relatively opaque and just confusing enough that people can blow it out of proportion and make it sound like something really scary when in fact...

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What is the Value of Financial Advice?

Vanguard released a new study showing that financial advice provides “meaningful” beneficial changes in behavior, performance and financial outcomes. They had previously published a study citing a 3% “advisor alpha”. I am not gonna lie – I always thought that number was BS and probably way too high. But is there a more reliable way to measure this? Let’s see. Investing is like being healthy – everyone knows how to do it, but implementing a plan and remaining disciplined is difficult. And...

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Is This The Hardest Investing Environment Ever?

I was on the Stansberry Investor Hour last week  with Dan Ferris discussing the markets and the broader macro environment. My segment starts at 29:30. Topics discussed: The general macro environment and why growth could remain sluggish. I was very bullish about bonds 24 months ago at the Stansberry Investment Conference, but that view has changed…. Bond math and why 0% yielding bonds make investing so difficult. FUN! Why I wouldn’t be surprised if markets don’t do much for a few years. Why...

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Why Do Countries Borrow in Foreign Currency?

We’ve seen a number of foreign debt based crises in the last few years with both Turkey and Argentina suffering from substantial episodes of inflation related to foreign denominated debts. Without getting bogged down in the specifics of these cases I want to touch on a more general question: Why do countries borrow in foreign currency?  I reached out to an international banker I know for his opinion on why this theme seems to keep occurring. Here’s what he had to say: Many countries have...

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Three Things I Think I Think – Bubbles Edition

Here are some things I think I am thinking about: 1) Is there a bubble in passive investing? Michael Burry of Big Short fame, says there’s a bubble in passive investing. The basic argument is that passive investing has skewed the markets and caused small cap value stocks to underperform. Burry, unsurprisingly, is invested in many small value stocks. Soooooo. This seems to happen once every few years where an active manager blames index funds for their performance. They’re an easy...

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Let’s Stop Talking About “Paying Off the National Debt”

When we talk about personal finance we often talk about paying off our debts to become financially free. But this is a fallacy of composition. While some households can pay off their debts, the economy actually relies on expanding debt (and assets) to have liquidity and growth. After all, debt isn’t necessarily bad. Yes, there are bad types of debt (like credit card debt which almost always have a negative long-term return), but there are also good types of debt (for instance, when someone...

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Black Hole Monetary Economics

Economic nerds are converging on Jackson Hole for their (our?) annual meeting and the big story of the event will be a controversial opinion by Larry Summers, which he laid out on Twitter yesterday. He is presenting a paper in which he argues [gasp] that monetary policy isn’t as effective as the economics profession has been led to believe. This is nothing new to readers of this site and anyone sympathetic to Post-Keynesian economics. I had publicly argued with Paul Krugman about this...

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