Pragmatic Capitalism

Practical Views on Money, Finance & Life

Author Archive

Yeah, The Fed Didn’t Cause That….


There are all sorts of crazy myths surrounding central banks. Which is strange because once you understand the operational realities of the monetary system you realize that Central Banks are actually pretty boring entities who mostly serve as bank clearinghouses with far less control over the economy than some think. But that doesn’t stop people… Read More

NGDP Futures Targeting – Still Doesn’t Work….


This post is pretty nerdy. If you’re a normal person you might consider skipping it…. It’s been a while since I talked about monetary policy, but the old debate about NGDP Futures Targeting kicked up again last week with a number of very smart people criticizing the mechanics of the idea. Here’s economist Noah Smith… Read More

Revisiting My “Useless” 2016 Predictions


Well, 2016 is over half way in the books. And since I am a big fan of personal accountability I am going to hold myself personally accountable for my “useless” predictions for 2016. I must say, however, since they’re “useless” and forecasting is out of fashion these days (not sure how anyone can make decisions about… Read More

There Are No “Bond Kings” in This Bond Market


I’ve called the 30 year bull market in bonds the greatest risk adjusted bull market ever because the figures are truly amazing. For instance, anyone who bought a 30 year T-Bond in 1985 generated about a 9% annualized return with just a 12% standard deviation. That’s 90% of the stock market’s return over the same… Read More

Revisiting Price Compression – Long Bond Edition


If you’ve read my paper Understanding Modern Portfolio Construction you know that I like to think of all financial instruments as if they’re bonds.  This is helpful for multiple reasons: It helps provide a realistic timeframe for holding certain instruments. It helps put the various risks of those instruments in the right perspective. The thing… Read More

2016 – More Like 1998 Than 2008


Last year when China was causing flash crashes and constant market fear I said that this environment looked a heckuvalot like 1998. And I said that there would be a huge cost to selling stocks into that environment. My basic thinking was: China is a risk, but it won’t derail the US economy. From a macro… Read More

What is Gold?


Jason Zweig has a couple of good pieces in the WSJ today on gold (see here and here). Jason is not a big fan of owning gold in a portfolio and I generally agree with him. However, I don’t completely agree with the description of gold as a “pet rock” and I think it detracts… Read More