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Tag Archives: Most Recent Stories

Your Balanced Index Still Isn’t Balanced

As a general rule I like simple indexing strategies like a 60/40 stock/bond portfolio, for the right person. It’s perfectly consistent with what I would call a “discipline based investing” strategy in that it’s evidence based, low cost, tax efficient, systematic and helps to self regulate behavior by rebalancing back to a less procyclical stock weighting over time. In other words, if you didn’t rebalance your 60/40 then it would grow to 70/30 (or more stocks) over time and this would...

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The Fed’s Policy Mistake has Been Made

Last April I said the Fed was on the verge of a policy mistake. My basic thinking on this was as follows: Excesses in the financial markets and economy were obvious last May when I hinted that the Fed should be raising rates. Inflation kept rising at an uncomfortable rate which warranted some Fed offset, but they remained behind the curve well into late 2021. By the time the war in Ukraine was in motion the economy was already showing worrisome signs of slowing, but energy prices were...

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Is This the Return of the 1970s?

Another hot inflation reading this morning with CPI coming in at 6% on the headline. The good news (if there is any) is that it does look like year over year inflation peaked back in February, but the outlook going forward is more and more muddled as time goes on. On the one hand, you have broadening services inflation and surging commodities. The war in Ukraine and potential for a conflict in Taiwan are strong arguments for continued high inflation. And on the other hand, you have rising...

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Three Things I Think I Think – Government Bankruptcy, Misery & the Return of the 70s

Here are some things I think I am thinking about: 1) The US Government Still isn’t Bankrupt.  Kim Dot Com, a New Zealand based technologist wrote a viral thread on Twitter claiming that the US government is bankrupt. A lot of it is based on basic errors and fallacies of composition so I made another Three Minute Money video on this topic to help provide some clarity. This will be old material for regular readers, but the 3 minute format is a nice succinct refresher. [embedded content] 2)...

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Three Minute Money – Understanding Banking & Inside Money

New video out today! In this video we cover the basics of banking and inside money. We describe how banks work and how they make loans which create deposits. We also begin to uncover the relationship between outside money and inside money. [embedded content] Useful links: 1) The Basics of Banking 2) Money Creation in the Modern Economy  3) Understanding the Modern Monetary System  About Post Author ...

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Three Things I Think I Think – Bonds, Bear Markets & ESG

Here are some things I think I am thinking about: 1) Is The Bond Bear REALLY Over Now?  JP Morgan issued a bottom call in bonds yesterday. The basic thesis is that the Fed has shocked financial markets with its aggressive position on rates and the needed effect will filter through the economy and inflation data in the coming year. I largely agree with this. In February I said that rates would likely peak out around 2.5% on the 10 year and they’re currently at 2.85% so we’ve gone a little...

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Three Things I Think I Think – When Things Break

Here are some things I think I am thinking about: As a housekeeping note – check out my new YouTube channel. It’s short hits on money and finance so people who like the long form reading might not enjoy it as much, but I am giving it a try. Constructive criticism is extremely valuable as I want this to be valuable to people.  1) Will interest rate risk transform to credit risk?  One of the things I’ve been hammering on lately is that I think that Fed made a policy mistake by not being more...

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Is It Time to Panic?

Here are two short videos discussing the current market environment and how we can think about navigating it. In short, I am feeling very cautious about the next 18-24 months and I think there’s a very good chance that this downturn is part of a more prolonged economic adjustment that involves digesting the War in Ukraine as well as the COVID boom “giveback”. This doesn’t mean you should panic though. The key to navigating this envionrment is understanding your risk profile, matching your...

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Three Things I Think I Think – 3MM, Student Loans & Passive Investing

Here are some things I Think I am thinking about: 1) Here’s a new episode of Three Minute Money. This one is “Where Does Money Come From?” I’m still getting the wheels greased here and building up for more interesting and advanced topics, but these are good building blocks. I hope you enjoy it. [embedded content] 2) Passive investing is ruining the world (again). Marc Andreessen and Elon Musk were railing against passive indexing over the weekend and that sparked a big debate about the...

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