For years we have been discussing the significance of the explosion of bandwidth capabilities and what it will mean to businesses and the economic growth of the world. We have argued that as bandwidth proliferates there will be a commensurate benefit to productivity and that its promise had been sidetracked by a series of policy mistakes (volatile...
Tuesday, June 23, 2009
Investor Behavior or Advisor Behavior -- 2009
Eighteen months ago, we published a post entitled "Investor behavior . . . or advisor behavior?" in which we pointed out that long-running research by the Dalbar, Inc. consistently demonstrates year after year that investors earn significantly less than the investment vehicles available to them.We also pointed out that, although retail "financial...
Thursday, June 18, 2009
Intellectual Affluence
Recently, George Leef of the John William Pope Center for Higher Education Policy published an essay entitled "Groupthink: Marching to a Single Drumbeat."In it, he discusses a serious problem facing both parents and children in the United States and Europe: strong evidence that academia is characterized by very little diversity of thought regarding...
Tuesday, June 16, 2009
Change -- the Investor's Only Certainty, revisited
Last November, we wrote a blog post entitled, "Change -- the Investor's Only Certainty," which is well worth revisiting based on the developments of 2009 thus far.In it, we refer to an essay which the late Richard C. Taylor kept through the years, and which had been written by his mentor, Mr. Thomas Rowe Price.That essay, "The New Era for Investors,"...
Friday, June 12, 2009
A wake-up call from Art Laffer
Economist Arthur Laffer has a new piece in the Wall Street Journal entitled "Get Ready for Inflation and Higher Interest Rates" in which he points out the enormous increase in the monetary base since September, 2008 (see monetary base graph, above, from the St. Louis Federal Reserve data).Mr. Laffer points out that this expansion of the monetary base...
Wednesday, June 10, 2009
A picture is worth a thousand words
There is a "good news" and "bad news" twist to this post. For the good news, our friend Brian Wesbury, Chief Economist at First Trust, has masterfully linked together a series of pictures that coincide beautifully with our belief that the "Panic of 2008" was just that -- a panic -- and that the recovery as things worked their way back to normal...
Tuesday, June 09, 2009
Socially responsible investing
In 1970, future Nobel laureate Milton Friedman published an essay in the New York Times Magazine entitled "The Social Responsibility of Business is to Increase its Profits."Professor Friedman's arguments are notable not only because of his masterful exposition of the problems arising from calls for greater "social responsibility" from "the soulless...
Wednesday, June 03, 2009
Stand still, little lambs, to be shorn!
One of the all-time classic "Economic Education Bulletins" published many years ago by the American Institute of Economic Research and re-published periodically with updated data is "Stand Still, Little Lambs, to be Shorn!" *
That essay -- most recently updated in January, 2005 -- explains the "hidden tax" of inflation. Using...
Monday, June 01, 2009
The Airplane and the Tetherball
There is a key distinction between the market price of a stock and the business underneath that market price, which investors would do well to always keep in the forefront of their mind.To highlight this distinction, Ben Graham created a famous metaphor, which he introduced in his 1949 edition of The Intelligent Investor as an illustration "in the...
