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Pragmatic Capitalism

Practical Views on Money, Finance & Life

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Bull Markets are the Hardest Part

strategy

There are two difficult times to be an investor – when the market goes up and when it goes down.¹ We all know the difficulty of the bear market. It usually works something like this: We think markets will go up for some reason. Markets go down. Markets go down a lot more than we’re comfortable… Read More

The Problem with Modern Banking

macro

When it comes to free markets and competition I am always more inclined to side with the idea that competition is a good thing that drives a more efficient outcome than bureaucratically managed markets. At the same time, we have to recognize that some degree of government is a good thing. There are, after all,… Read More

21 Questions….

macro

The good people over at Guru Focus did a nice Q&A covering 21 questions that you may or may not find interesting. It’s pretty short and painless so you won’t endure too much agony reading it if you choose to: How and why did you get started investing? What is your background? Like most people, I… Read More

Why I Prefer to Think of Stocks as Bonds

strategy

Bonds have always struck me as fairly simple instruments. In general, you know what a (high quality) bond’s return will be and you know what its time horizon is. That makes investing in fixed income instruments much simpler than investing in stocks. After all, the most difficult part about the stock market is that you… Read More

Indexing is the Result of Homogeneous Markets, not the Cause

myth

As indexing strategies gain in popularity I am seeing a common selling point from active stock picking fund managers – the idea that more indexing creates more opportunity for active managers. This appears correct on the surface. After all, if everyone started using index funds then this would create a homogeneous set of product wrappers that cannot… Read More

Make Berkshire Hathaway Great Again

strategy

Asset allocation is all about matching future expectations with your future needs. The problem with doing this is that our future needs are only loosely known and predicting the future of certain asset class returns is incredibly difficult. Still, there are some basic principles we can apply to this endeavor that increase our odds of… Read More

A Cheat Sheet for Understanding Monetary Realism

macro

A few years back I started calling my economic views “Monetary Realism”. This was based on the popular paper I wrote called “Understanding the Modern Monetary System”. I wrote the paper to serve as an operating manual for the economy and when I recognized that many of its views were unique I realized that it was silly… Read More