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Pragmatic Capitalism

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The Best Asset Price to Know Twenty Years Out

macro

Tyler Cowen asks a fun question here: “You are an investor with $10 million planning to cash out in 20 years. A genie appears and offers to send you the price of one but only one asset 20 years from now to inform your investment decisions (a stock, currency pair, commodity, equity index, etc.). What… Read More

Why Do Corporations Pay Dividends?

how

There is increasing chatter in recent years about share repurchases, dividends, corporate investment and the ideal way for firms to use capital.  But one question that economists can’t really agree on the answer to is why companies pay dividends at all?  As noted in an excellent Twitter conversation initiated by Matthew Yglesias, even great thinkers… Read More

Let’s Talk About the US Government’s Interest Burden

myth

Greg Ip had a piece in the Wall Street Journal yesterday discussing the debt burden in the USA and how low interest rates have “moved back” the “hands on the doomsday debt clock”.  The article touches on the important topic of entitlement spending and whether it’s sustainable, but does so in a manner that misleads readers… Read More

The Importance of Global Asset Allocation – Japan Edition

myth

I’m a big fan of owning a global financial asset portfolio consistent with something resembling the Global Financial Asset Portfolio (though, I would also add that this portfolio isn’t necessarily ideal).¹  If you’re a US investor this has looked like a pretty silly idea in the last few years as foreign stocks have been poor performers… Read More

What Financial News Sources Should You Read?

reading

The Wall Street Journal recently noted that they will be closing the backdoor search loophole to their content thereby forcing readers to subscribe.  For those who aren’t aware of this trick – you can access most pay-for financial news sites by searching for the headline on Google.  Clicking on that link takes you to the… Read More

Why are Treasury Bonds the Ultimate Safe Haven?

how

The last 10 years have exposed a very important reality for any global asset allocator – US Treasury Bonds are the ultimate safe haven investment.  For decades we have heard stories about how gold, silver, real assets or other types of financial instruments would serve as the “safe haven” investment during times of crisis.  Many… Read More

Dear Hedge Funds: Index Funds Didn’t Eat Your Returns

myth

Indexing strategies have been the fastest growing segment of the asset management world in the last 15 years due to low fees, tax efficiency, diviersification and the failure of higher fee active managers to justify their higher fees.  As this trend plays out we’re hearing more and more stories about how this trend is bad for… Read More

Three Things I Think I Think – Scary Stories Edition

macro

Here are some things I think I am thinking about: 1 – Scary Stories Sell Well.  Morgan Housel has a great piece over at Motley Fool about why scary stories sound so smart in finance.  Morgan rings off a bunch of reasons why scary stories usually sound smarter than bullish stories.  This is particularly important… Read More

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