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Pragmatic Capitalism

Practical Views on Money, Finance & Life

‘Behavioral Finance’

Is the Junk Bond Market the Next 2008?

Recency bias is a real sonofabitch.  After someone goes through a traumatic experience they tend to be shocked into believing that the next big traumatic experience is right around the corner.  But the reality is that outlier events are outlier events for a reason – they don’t happen nearly as often as we expect.  For… Read More

What if There’s no Such Thing as a “Normal” Economy?

Tyler Cowen has a piece in the NY Times from this past weekend discussing the potential that the US economy will never return to “normal”. The article implies that the US economy could be in the middle of a “great reset” during which the future looks quite “grim”. But there’s a potentially substantial problem in… Read More

The History of the Global Equity Portfolio

One of the nice things about thinking of the world in macro terms is that you are less inclined to fall victim to a fallacy of composition. That is, in the financial world we tend not to think in terms of aggregates so we often extrapolate personal or localized experiences into broader concepts which often… Read More

Game Theory Cannot Rationalize Seattle’s Super Bowl Loss

A number of finance and economic writers have come out rationalizing Pete Carroll’s controversial play call in the Super Bowl which ended up being intercepted by the Patriots and leading to the loss.  The arguments all use Game Theory to argue that a pass play increased the odds of winning by increasing the randomness of the possible… Read More

Economics is a Social Science, not a Natural Science

Economics is categorized as a “social science” alongside anthropology, psychology and sociology.  Which makes complete sense considering that economics studies the relationships that dictate how we produce and consume goods and services within the society.   But you wouldn’t know that from the way many economists discuss economics.  Too often economists try to establish economics… Read More