Tag Archives: Most Recent Stories

People are still losing their minds over “passive investing”. Here’s the CEO of a high fee fund management company complaining: “Passive investors don’t engage the market with finely tuned attention to each company. They don’t help allocate capital specifically to well-run companies with competitive advantages and long-term growth prospects. Nor do they invest in discovering price disconnects between securities, undervalued assets, or future innovators.” Oh man. Lots to unpack there. Let’s...

I was reviewing yesterday’s Z.1 release from the Federal Reserve and all I could think to myself was “man, this is all so boring.”  Boring is good in economic terms. It means there are no outlier sectors doing weird stuff that can create future instability. But this is all part of a broader theme that I’ve talked about regularly here – the US economy is becoming increasingly stable.¹ Now, I know what you’re thinking – “Cullen, we’ve had two stock market busts and a financial crisis in the...

One of the first things I learned in undergrad economics was the idea that free trade is one of the only things that most economists agree about. The idea is simple and was probably said best by Joan Robinson: “If your trading partner dumps rocks into their harbor, you do not make yourself better off by dumping rocks into your own harbor.” Donald Trump’s “America first” thinking on this idea is an attractive, but basic fallacy of composition – if you impose restrictions on your trading...

Do you remember the movie Tremors with Kevin Bacon about underground monsters? It was terrible. But they ended making like 5 or 6 of them. It was like a bad nightmare that wouldn’t end. Which is similar in many ways to a recurring theme on this website where I explain how the USA isn’t bankrupt. I was reminded of this while reading this post titled “Tremors” by Stanford economist John Cochrane in which he explains how rising interest rates pose a threat to the US government’s ability to...

Warren Buffett has become a big advocate of index funds in the last decade or so. Which is interesting because he does not eat his own cooking when it comes to this advice. Instead, Berkshire continues to own a huge amount of public companies. It’s especially odd in the wake of his index fund bet since Berkshire Hathaway also undperformed the index fund. I’ve called this a contradiction over the years and it has angered a lot of Buffett’s stock picking disciples. But I think it’s a topic...

Well, it’s that time of year – the annual Buffett letter is out. Love him or hate him, these letters are always must reads as they’re filled with awkward sex jokes and investment knowledge that you can pass on to your kids. The investment knowledge, that is, not the sex jokes. Here are some key takeaways from this year’s letter: Stocks are really expensive. He writes: “In our search for new stand-alone businesses, the key qualities we seek are durable competitive strengths; able and...

When Robo Advisors first came on the scene they differentiated themselves by claiming to be fiduciaries who didn’t have all the conflicts of interest that Wall Street had. They were right. But they were also wrong in thinking that this was a sustainable business model. In 2015 I wrote a series of posts critiquing these services (see here and here): “The smaller Robos are in a branding bind here. They are hesitant to adopt their own ETFs because then they begin to blur the lines on being...

My recent post on guns got a lot more attention than I expected. It wasn’t a fully hashed out view of mine which was careless and unfortunate because I got a flood of emails from people on both sides who thought I was overlooking important points. Which I was, because it was a short blog post. The most common response was that I was not actually proposing anything. Which is true. I think this is an impossible issue to solve because I think it’s a serious cultural problem that is so...

Recent economic data has bond yields jumping a little bit on the worry of higher future inflation. According to many this is the main concern behind the recent volatility in stock and bond markets so let’s see if we can’t put some of this data in perspective so we can better understand the risks to our portfolios. Secular vs Short-Term Trends in Inflation Inflation is closely correlated to secular macro trends in the economy.While short-term counter-trends will appear worrisome at times...

In the wake of a relatively meager 10% sell-off in the stock market we’re seeing the old financial “blame game” play out all over the place. Here’s an article blaming inflation. Here’s an article blaming machines. And you know, there’s probably a shred of truth to all of these articles, but I hate this idea that there’s an antagonist and protagonist in this story. The market is more complex than that. It all kind of reminds me of the financial crisis. The financial crisis blame game still...