Pragmatic Capitalism

Practical Views on Money & Finance

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3 Valuable Lessons From the Nasdaq Bubble

It only took 15 years, but the Nasdaq has finally set a new record high. I always like to say that the biggest mistakes make for the biggest lessons. So, what can we learn from this grueling 15 year round trip? 1) Diversification Works. The biggest lesson from the Nasdaq bubble is the simple lesson of… Read More

Why Financial Stability Has Become Increasingly Important

One of the hottest debates in economics today is about the topic of financial stability and whether the Federal Reserve and other policymakers should be concerned with trying to stabilize the financial markets at times. Many prominent economists argue vehemently that the Fed shouldn’t be concerned with such matters while many others argue that financial… Read More

Indexing Really is the Future of Investing

John Bogle presented at this year’s Grant’s Spring Conference and made the argument for indexing as the way forward for investors. You can find his presentation slides here.  Jim Grant offered some push back from the “active” side which raised the question – is indexing superior to specific security selection and which is the way forward… Read More

What Are Your Actual Returns?

I always say historical returns are always a better gauge of possible risks than they are of future returns investors can expect. It’s very easy to look back at past market performance and assume it would have been easy to earn those return numbers. Investors are much better off figuring out ways to earn as much of the performance from the market or fund returns going forward by reducing commissions, fees, taxes and unnecessary portfolio turnover.

Three Things I Think I Think

The latest edition of some things that I think I am thinking about: 1)  The US economy sure looks anemic. Q1 GDP is expected to come in at 1.2%. My own metrics show even lower growth possibly nearing 0.5%.  But the Atlanta Fed notes that Q1 has been weak throughout the recovery: The picture below… Read More

Finding Religion on “Crowding Out”

Here’s Paul Krugman on a recent IMF report which says that government deficits don’t necessarily “crowd out” private investment: The false belief is that government deficits necessarily “crowd out” investment, so that reducing deficits should free up funds that lead to higher investment. Not so, says the IMF: when governments introduce deficit-reduction measures, investment falls… Read More