If you play this strategy [i.e. mispricing risk], you can expect…a bunch of years of multi-million returns, followed by an eventual unceremonious firing (if that) and life in the Hamptons. If you follow an efficient markets strategy, you can expect the going rate of return on the diversified market [portfolio]. Which sounds better?
— Tyler Cowen (George Mason University)
If the alternative to getting rich and then going bust was to never get rich in the first place, then the alternative looks bad even without bailouts.
— Matthew Yglesias (Center for American Progress)
I want to write an investment newsletter, but I don’t like the pay-and-email model. I want it to be transparent, and like everything I write, I want the information and analysis to reach as many people as possible. So here it is. I wrote this first edition last Monday, but it took a week to get some feedback and rejigger the format. If any of it is out-of-date, now you know why. I most regret that I didn’t post it in time for you to take advantage of this. — AWO
It’s a stupid time to start an investment newsletter.
Economists are worried about a “double-dip” recession, public and private debt are at record levels, the world has just escaped two financial crises in three years, and the Chairman of the Fed says the future is “unusually uncertain.” With record-breaking temperatures outside, a smart person would work on their tan until the economy returns to normal.
Trouble is, I don’t know what “normal” looks like. Continue reading “The Ethical Investor: August 2010”
A little over a week ago, I asked, “What…is the lesson from the financial crisis for Christmas? What is the connection between this economic shortfall and our moral heritage?” The best answer came from someone who wasn’t actually trying to answer the question. Yesterday, Wharton professor Joel Waldfogel, of Scroogenomics fame, spoke at LSE. His lecture added another dimension to the deadweight loss of Christmas. The following charts are not included in his book; this is a Trading 8s exclusive… Continue reading “22 Days To Go: How Christmas Caused the Financial Crisis”
With Halloween just around the corner, I thought I’d show you how economics can even rid you of those pesky haunting spirits. But seriously, here’s my second column in the South Florida Sun-Sentinel. The question I address lies at the heart of public choice economics, though I didn’t have enough room to delve into the details too much. I’ve written briefly about this subfield before, and I think it deserves more careful consideration by economists, not to mention the voting public. The peak of public choice came under James M. Buchanan (who won the Nobel Prize) and Gordon Tullock, both of whom concluded that most government intervention makes things worse. You can debate their opinion—and I do, on many counts—but too often we talk about market failure and don’t even think about the negative consequences of the government “solutions” we are proposing. Continue reading “Ghostbuster Economics”