Finance Theory

Disciplinary Action

By, 12/30/2006
There's a lot of talk in the popular press these days about an "imminent" US recession and the tired old legs of this bull market.read more
Austin Fraser
Reality Check

The Profligate Consumer

By, 12/29/2006
The news media has everyone just about convinced the "conspicuous consumption" and "pecuniary emulation" of US consumers is out of hand.read more
Behavioral Finance

Avoid Some Yearend Pitfalls

By, 12/29/2006
If you're like most people, you're probably indulging in a bit of yearend introspection as 2007 approaches.read more
Politics

The Boy Scout in the White House

By, 12/28/2006
One of America's shortest running presidents was also its longest lived.read more
Investor Sentiment

Burning Questions; Scorched Investors

By, 12/26/2006
The WSJ Online recently held an online survey to answer this burning question: "What proportion of your holiday gift spending did you do online this year?" The results? As of December 26th:
  • 31% of shoppers do 75% to 100% of their shopping online
  • 24% of shoppers do 50% to 75% of their shopping online
  • 15% of shoppers do 25% to 50% of their shopping online
  • 30% of shoppers do less than 25% of their shopping online
So, according to the survey, over 70% of people do some shopping online for the holidays, and well over half do more than 50% of their shopping online! Given such strong numbers, we ought to go out and buy up all the internet retailers like Amazon and ebay, right? Maybe.read more
Personal Finance

Bad Santa

By, 12/23/2006
Many investing pundits try to give you gifts for the holidays in the form of stock advice.read more
Michael Hanson
Neuro-economics

Metaphors We Invest By

By, 12/21/2006
Does this sentence strike you as odd?: The markets are up today! Probably not.read more
Others

Gonna Fly Now

By, 12/21/2006
Yo, Adrian! 2007 has all the makings of another sequel.read more
Interest Rates

When Normal Feels Weird

By, 12/21/2006
The 30-year fixed-rate mortgage in the United States is 6.read more
KC Ellis
The Advisor's Corner

Portfolio Construction

By, 12/20/2006
For investors who are just starting out (or starting over), the process of building a portfolio from scratch can be a daunting one.read more
Geopolitics

Baht Were They Thinking!?

By, 12/19/2006
Since the coup earlier this year (see our past commentary: "Could a Thai Coup Overthrow the Markets?"), Thailand's new military-installed government has made a major economic policy gaffe.read more
Media Hype/Myths

Rise of the Supervillains

By, 12/18/2006
Remember the good old days, where every CEO was a visionary, a patriot, an innovator…a superhero! In the late 90s, triumphant executives would grace the covers of business periodicals with big smiles and statuesque poses.read more
Investor Sentiment

Contrary About Contrarians

By, 12/16/2006
It's that time of year again.read more
Doug Regner
Repeatable History

Bad Backward-Looking Logic

By, 12/15/2006
Economic slowdown?!?! Head for the hills! One of the media's favorite reasons to be dour this year has been the incremental slowing of US GDP numbers.read more
Politics

Low-Impact Tragedy

By, 12/15/2006
Democratic Senator Timothy P.read more
Politics

Surf's Up

By, 12/14/2006
You may be tempted to view the recent elections in Latin America as further evidence of a growing red tide sweeping the region.read more
Others

Manufactured Protectionism

By, 12/13/2006
There's a good chance you think the entire world's manufacturing production has moved to developing economies like China and India.read more
Lara Hoffmans
Inconvenient Truths

Flipping Housing Bubble

By, 12/12/2006
You are in mortal peril.read more
Currencies

Look Out Below!

By, 12/12/2006
The dollar is falling! And the sky, too! At least that's what the media has likely led you to believe.read more
KC Ellis
The Advisor's Corner

Hedge Funds

By, 12/09/2006
Over the past ten years, there has been tremendous growth in hedge funds.read more
Behavioral Finance

Brain Discord

By, 12/09/2006
We have to live with ambiguity and discord every day.read more
Market Cycles

Production Junction; Market Functions

By, 12/07/2006
A lot of economic theory deals with creating value, which we can loosely define as the value of an activity leftover after subtracting from it the cost of doing it (and if you want to get technical, also the opportunity cost of not undertaking an alternative activity).read more
Behavioral Finance

Standard of Misconception

By, 12/07/2006
We aren't going to wax political, or even philosophical, on income inequality or standard of living inequality in the world.read more
Trade

More Connected Than It Looks

By, 12/05/2006
We've written often on this page about the importance of trade and the interconnectedness of the global economy, and how in turn these promote greater total economic growth.read more
Others

Improvement is Still Good

By, 12/05/2006
Treasury Secretary Paulson is on a mission to make US capital markets more competitive.read more
Aaron Anderson
The Global View

Pray for Higher Prices

By, 12/05/2006
So far, central banks around the world are doing an admirable job of keeping global inflation in check without choking off economic growth.read more
Finance Theory

Asymmetric Investing

By, 12/02/2006
It's pretty rare that anyone finds an investment that can't go down.read more
Investor Sentiment

Skyscraper of Worry

By, 12/01/2006
A common adage among fellow behavioral finance devotees is "bull markets climb a wall of worry".read more
Austin Fraser
Reality Check

The Current Account—One Less Thing to Worry About

By, 12/01/2006
The current account balance is a commonly misunderstood economic statistic.read more
Others

Not All Destruction is Created Equal

By, 11/30/2006
We've written several times in this commentary on equity supply destruction and its ability to drive stock prices higher.read more
Others

Free Trade Protectionists

By, 11/29/2006
What kind of an economy was the United States 150 years ago? Primarily agrarian.read more
KC Ellis
The Advisor's Corner

Approaching Retirement

By, 11/29/2006
Financing retirement is perhaps the biggest challenge facing investors.read more
Interest Rates

A Hawkish ECB

By, 11/28/2006
The European Central Bank (ECB) is a strange animal.read more
Investor Sentiment

Much to Be Thankful For

By, 11/25/2006
We're a little lethargic from all the turkey and fixings yesterday.read more
Capitalism

Proud to be Liberal

By, 11/23/2006
Milton Friedman, the recently deceased economist and Nobel Laureate, once asked the public this simple question: "How do you make a pencil?" By appearance it's a simple object.read more
Media Hype/Myths

Bamboozled by Bogus Bubbles

By, 11/22/2006
What's a bubble? A small globule, typically hollow and light? A small body of gas within a liquid? Well, technically yes.read more
Alternative Investments

Free to Give

By, 11/21/2006
To kick off the holiday week, we're taking a look at the "New Philanthropy".read more
Inflation

Inflating Wages

By, 11/18/2006
One of our favorite pastimes is delivering bad news to the bears in times we believe it's a bull market (like now).read more
Capitalism

Capitalism and Freedom's Stalwart Defender

By, 11/17/2006
Nobel prize-winning economist Milton Friedman has died today at the age of 94.read more
Alternative Investments

Deriving Stable Markets

By, 11/16/2006
We hear a lot of irrational worries about the derivatives market.read more
Corporate Earnings

Domestic Growth Abroad

By, 11/15/2006
It's been one of the best periods for US corporate earnings since World War II.read more
Personal Finance

More Freedom; More Money

By, 11/14/2006
Less regulation actually increases government tax receipts.read more
Personal Finance

Are You Optimal?

By, 11/11/2006
Finance geeks already know what an "optimal capital structure" is.read more
KC Ellis
The Advisor's Corner

The Dodgy Dow

By, 11/11/2006
Client: I recently read that the Dow Jones Industrial Average is nearing its all-time high? What does this mean to me? The easy answer is "not much.read more
US Economy

Too Busy Working

By, 11/10/2006
United States unemployment stands today at a 5-year low of 4.read more
Politics

Little Surprise Power for the Donkeys and Elephants

By, 11/09/2006
The media blitz is on.read more
Corporate Earnings

Ho Hum - Another Stellar Earnings Season

By, 11/08/2006
Yawn…another quarter, another double-digit rise in corporate earnings.read more
Politics

Thoughts on Election Eve

By, 11/07/2006
With the media giddily anticipating tomorrow's mid-term elections, headlines are dominated by breathless commentaries, wild predictions, and 11th hour campaigning.read more
Behavioral Finance

Reckless Teen Investors

By, 11/04/2006
Sharon Begley's science column in today's Wall Street Journal is an insightful look into the psychological underpinnings of reckless teen behavior.read more
Media Hype/Myths

No News is Good News

By, 11/03/2006
Here's a smattering of today's mass-media, front-page headlines:"Study: Ocean's edible species fading," USA Today"Wildfire Murder Charges Filed," cnn.read more
US Economy

The Savings Rate Myth

By, 11/02/2006
We're a bit tired of hearing of the over-extended consumer.read more
Emerging Markets

Caveat Emptor

By, 11/01/2006
The siren song of Chinese equities has proved too hard to resist.read more
Alternative Investments

Markets Do Just Fine Regulating Markets

By, 10/31/2006
We've been listening to the media get it wrong for so long, we almost missed it when someone actually got it right.read more
Capitalism

Have a Market Mentality

By, 10/27/2006
Capital markets are all about innovation, technology, dynamic change, and the flow of information.read more
GDP

Stocks Don't Look Back to the Future

By, 10/27/2006
It's official: US GDP growth slowed in the third quarter.read more
Others

Even More Destruction

By, 10/26/2006
Lately we've been lauding the virtues of destruction.read more
Others

Three's a Charm

By, 10/24/2006
P/E ratios are fickle things.read more
Investor Sentiment

Fears for Facts… Blowout Sale!

By, 10/24/2006
We're trading fears for facts! Come on down and trade in some of those jalopy-like worries you've been holding on to and drive a spanking new piece of data off the lot today! Fear of a recession? Trade it in for positive GDP data for no money down! Inflation fears? We've got a low headline inflation rate just waiting for you! We're so sure you'll love these facts once you've taken them for a test drive, you'll trade in your fears for good!
  • Global GDP continues to outpace analyst forecasts and remains above average levels.
read more
Others

The Financials Revolution

By, 10/21/2006
How can it be that an industry that creates no tangible products is worth about 25% of the value of all equities, and represents an even higher proportion of profits? It's a time of great innovation and development throughout the Financials sector.read more
Capitalism

When Destruction is Good

By, 10/20/2006
Media empires are crumbling! Thousands of electronic products face obsolescence yearly! Large, well-established companies are being exterminated by leaner, more innovative competitors! How can the economy possibly survive amid continual danger to its products? Believe it or not, all this turmoil is positive.read more
Corporate Earnings

Consistently Too Low

By, 10/19/2006
Already third quarter earnings are coming in well ahead of expectations.read more
Investor Sentiment

What, Me Worry?

By, 10/18/2006

Here are three facts:1. The German economy is growing at its fastest rate since 2000.2. German investor confidence is at its lowest level in more than 13 years, according to the ZEW survey.3. The German DAX stock index is up over 19% this year (in USD).

read more
Others

Shocking Returns!

By, 10/17/2006
Returns on Utilities stocks are truly electrifying this year.read more
Others

Flip it to See Stocks' Value

By, 10/14/2006
We think price-to-earnings ratios are pretty boring.read more
Deficits

Trade Deficits Pop Quiz

By, 10/13/2006
Pop-quiz time! (Don't worry, this won't go on your permanent record.read more
Politics

School's Out for the Congressmen!

By, 10/12/2006
Throw your pencils and notebooks in the air! The 109th Congress is out for the year and they've all gone home.read more
Behavioral Finance

North Korea Can't Nuke Stocks

By, 10/11/2006
Fears are rising around the world over the purported testing of a nuclear weapon in North Korea.read more
Investor Sentiment

Industrials Revolution?

By, 10/10/2006
We've noticed a lot of press lauding recent all-time highs of the Dow Jones Industrial Average.read more
Politics

Get Some Sleep on November 7th

By, 10/07/2006
While pundits, the press, and pollsters pine away for results of the US mid-term elections deep into the night on November 7th, we'll be tucked in for a long autumn slumber.read more
Emerging Markets

Re-Emerging Emerging Markets

By, 10/06/2006
Perma-bears lauded the seeming implosion of Emerging Markets stocks when the market correction began in the spring.read more
US Economy

Guess What? The US is Bigger than Ever.

By, 10/05/2006
Hopefully you said "That's Great!" after reading the above.read more
Commodities

A Tale of Two Charts

By, 10/04/2006
What's really going on in the commodity markets? You'd be hard pressed to find a positive story on commodities lately, with pundits citing oil's decline, the lack of hurricane disaster, and calming tensions in Iran as reasons to turn bearish.read more
Capitalism

In Defense of Global Capitalism

By, 10/03/2006
It's amazing to us, given the results of the 20th century, that capitalism still needs a staunch defense now and again.read more
Market Cycles

Housing Won't Haunt Real Estate, or Stocks

By, 09/29/2006
Most people think of just housing when they read about real estate.read more
US Economy

I'm OK, You're OK (and We're Both US Consumers)

By, 09/29/2006
Psychologist Thomas Harris wrote a book called I'm OK, You're OK in 1976 explaining his theory on how we perceive ourselves and others.read more
Inflation

The Media's Message on the Bond Market is Right…Sort Of

By, 09/28/2006
The media has largely attributed the current US bond market rally—10-year Treasury yields have fallen 65 basis points since the end of June—to two factors: an oncoming recession and reduced inflationary pressures.read more
Emerging Markets

Emerging Market Contagion?

By, 09/27/2006
If you read the newspaper in the past several weeks, you would think emerging economies were on the brink of imploding: a coup in Thailand, an assassination of a central banker in Russia, a budget fiasco and rioting in Hungary and a political maverick in Mexico declaring his own government after losing an election fair and square.read more
Geopolitics

It's Not a Law Just Because it Passes

By, 09/26/2006
Protectionism is lurking and ready to rear its ugly head again.read more
Behavioral Finance

What Happened to the Big Storms?

By, 09/22/2006
Here we are in mid-September of 2006 and not a single hurricane has made landfall in the US.read more
Interest Rates

Oh Fools, Where Art Thou?

By, 09/22/2006
Here's a familiar refrain among our investing peers (tell us if you've heard this one before): The number of outstanding high-risk loans (specifically in the mortgage arena) will eventually lead to an unprecedented number of defaults once we hit the next recession.read more
Others

Mergermania!

By, 09/20/2006
When companies buy each other they take equity supply off the market and pay a premium for those shares.read more
Geopolitics

Could a Thai Coup Overthrow the Markets?

By, 09/20/2006
A story hit the wires around midday that Thailand's Prime Minister Thaksin Shinawatra has declared a state of emergency in response to a military coup.read more
Taxes

Japanese Businesses (Finally) Pay the Taxman

By, 09/19/2006
The Japanese government is going to have a fat wallet.read more

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