We suppose it is understandable, but we are hearing lots of friends and acquaintances telling us they have pulled all their investments out of the market and gone to cash during this recent correction.Typical are comments such as "I rode it down during 2008-2009, and I'm just not going through that again."We remember the same level of skittishness...
Thursday, May 20, 2010
"Austerity" is often a code word for "anti-growth measures"
This segment from CNBC's Kudlow & Company yesterday is well worth a watch, because in the heated debate that takes place, the panelists touch on many of the important issues that we have been writing about for months, and that we believe investors should understand.The clip features host Larry Kudlow, First Trust Chief Economist Brian Wesbury,...
Wednesday, May 19, 2010
More troubling analysis of Senate financial bill
New disturbing features of the so-called "Reforming American Financial Stability Act of 2010" continue to come to light.The Wall Street Journal today cites Vanguard Chief Investment Officer Gus Sauter's concerns about a provision of the bill that he feels would enable the FDIC to play favorites among bondholders of a corporation undergoing resolution...
Tuesday, May 18, 2010
Growth is the answer: the primacy of human creativity
Today in the Wall Street Journal's opinion page, University of Chicago finance professor John H. Cochrane has a hard-hitting and powerful analysis of the Greek sovereign debt crisis and its implications entitled "Greek Myths and the Euro Tragedy" (hat tip: Scott Grannis).It should be required reading for all those who wish to understand the situation...
Thursday, May 13, 2010
Another black swan?
In a blog post we published back in December of 2008, we discussed the term "black swan," coined by Nassim Nicholas Taleb to describe statistically improbable "large-impact events."We argued then that the events of 2008 should have caused a major re-evaluation of the world's rush to embrace "investing" via quantitative "black box" strategies and the...
Monday, May 10, 2010
Don't panic!
The recent volatility in the market, coming only a year after the bottom of the most vicious bear market in recent memory, spooked many investors.Many asked themselves, "Why would I want to leave any money in the stock market, where months -- or even years -- of gains can be erased in a single day?"These investor jitters are understandable, and we...
Thursday, May 06, 2010
The question of our time
Economist Scott Grannis at his blog the Calafia Beach Pundit has an excellent post from May 5 entitled "The silver lining to the Greek crisis."Towards the end of the post, after discussing some of the implications of the market reactions in bond yields and currencies around the world, he provides a completely different paradigm for viewing the ongoing...
Wednesday, May 05, 2010
TED spreads and US debt
The "TED spread" (short for for "T-Bill/Eurodollar spread") is a measure of the difference ("spread") in yield between the three-month US Treasury bill and the three-month London Interbank Overnight Rate (LIBOR).The measure is useful as an indicator of the difference in confidence lenders have when choosing to loan money to the US (buying US Treasurys)...
