Pragmatic Capitalism

Practical Views on Money & Finance

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Not Your Father’s 60/40

Research Affiliates has a good piece out that touches on the future difficulty of owning a 60/40 stock/bond portfolio. They predict that a 60/40 will generate a measly 1.2% in real terms going forward.  I am less pessimistic, however, I do think that a 60/40 will fail to generate the types of returns that investors… Read More

The Fed’s “Crazy Train” and the Stability that Breeds Instability

Hyman Minsky’s Financial Instability Hypothesis posited that a capitalist system is unstable at times because it will tend to move from periods of stability, when the illusion of stability leads to irrational risk taking, which then leads to inevitable economic contraction. In the FIH he said: “The first theorem of the financial instability hypothesis is that the… Read More

Why Did JM Keynes Get Fired?

As he noted in his recent post, Ben Carlson fired John Maynard Keynes from managing money. Looks like Keynes the capitalist can join Marx’s reserve army of the unemployed once and for all. Ben cited the short-termism of current day investors as well as the high level of volatility in the portfolio. Ben’s almost certainly right –… Read More

Why Greece Won’t Leave the Euro

Earlier this year Yanis Varoufakis, the incoming Finance Minister of Greece stated his position on Greece’s Euro membership clearly: “If it is in my power to determine…Greece will neither want to leave the euro nor threaten to do so. We should not have entered the euro – this is crystal clear, but once in, it… Read More