May 2018

The Blame Game

The Federal Reserve, quantitative easing, FAANG, margin debt, index funds, buybacks, low interest rates, CAPE ratio, and now ETFs. Exchange traded funds have found a home in the charlatan’s tool kit. Eric Balchunas says, “Blaming ETFs for the rise of the stock market is like blaming MP3s for the rise of Nickelback.” There is a lot…

Animal Spirits: Tesla Hathaway

Stories discussed Community adjusted what? What would a bear market do for active management? You think our central bank is bad? Carthage > Harvard Yale should not index.  Homes are not a great investment Don’t wait until your 45 Would a bear market kill active management? How much would you pay to keep using Google?…

Should I Time the Market?

Ben and I spoke about a listener question on this week’s Animal Spirits podcast. The question came from a young person in their 30s, and he was asking about timing the market. Given where valuations are, and that he has many decades ahead of him, would it make sense to wait for a better pitch…

The Compound

What’s greater, 306 or 612 ? You might be inclined to pick the first choice, because 30 is five times larger than 6. But due to the (miracle/magic, Einstein quote, etc.) of the compound*, 612 is three times larger than 306. $1 earning 6% a year over 30 years grows to $5.74, a rate of return that many…

These Are the Goods

Articles I know that the old value adage is that if you buy quality companies and hold them forever, they will pay for themselves, but I don’t believe that! By Aswath Damodaran There’s a 0.26 correlation between the S&P 500’s total return and the change in real GDP. By Charlie Bilello The volatility may not…

The Root of It All

Steven Pinker wrote, “In almost every year from 1992 through 2015, an era in which the rate of violent crime plummeted, a majority of Americans told pollsters that crime was rising. In late 2015, large majorities in eleven developed countries said that “the world is getting worse.” But crime isn’t rising, and the world is…

$100,000,000,000

With the newly announced $100 billion share repurchase program, it’s clear that Apple is running out of ideas. Orrrrr maybe they’re just being responsible stewards of capital. Buybacks have a negative stigma, even though Econompically speaking, they’re actually equivalent. But people hear buybacks and think of Cisco  in the 90s and other easily available examples as…

Animal Spirits: Micro Bubbles

Stories Discussed Demographics is destiny Retirement is going to be tough But things are getting better It’s a bubble. So what.  Wait. What is a bubble? The tech takedown Amazon’s cash flow Amazon is worth $1,019 a share.  The most brilliant investor ever.  Listen here Charts mentioned Tweets mentioned Going back to 1896, the Dow…

The Cost of Waiting

Baby Boomers did not do a great job preparing for their future. The median retirement account balance for people ages 56-61 is just $25,000. This could have been accomplished by contributing just $6 a month into a 60/40 portfolio (since 1980). Ask somebody whether they would prefer $100 today or $500 in twenty years, most…