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Pragmatic Capitalism

Practical Views on Money, Finance & Life

‘How Things Work’

Where Does Money Come From?

“The process by which money is created is so simple the mind is repelled.” – JK Galbraith There’s a reason why myth # 1 in my “biggest myths in economics” is “the government prints money”. It is, by far, the most pernicious and misleading of the economic myths that exists. I was reminded of this today… Read More

What is “Cash” in a Brokerage Account?

The recent attacks on Charles Schwab from Betterment and WealthFront seem to prove a disturbing reality – many advisors simply don’t know what “cash” in a portfolio really is and its necessarily positive aspects.

Problems with “The Long-Term”

John Maynard Keynes once famously said “In the long-run we are all dead”. But the full quote doesn’t often get hashed out. Keynes said: “But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task, if in tempestuous… Read More

The Only Basic Financial Advice You’ll Ever Need

If there’s one thing I am most proud of it’s that I became 100% financially independent (meaning I relied on no other entity or person for income or financial assistance) before the age of 30. Yes, there was a certain degree of luck that went into that (e.g., if I’d started my first company in 1999… Read More

Setting Realistic Investing Expectations

If I had to pick the single largest problem in the investment community it would be irrational expectations about future returns. This comes from several sources. The primary one being overconfidence bias. And the second being widespread misunderstanding of real, real returns. Overconfidence bias leads most of us to believe that we’re better at something… Read More

Investing and the Intertemporal Conundrum

I went to see Interstellar last night.  I won’t ruin it for you, but if you’re in to things like time travel, intergalactic travel and space ships then you should probably go see it.  One of the central themes of the movie is relative time discrepancy.  Due to gravitational anomalies time in the movie is… Read More

Understanding Money

Just letting readers know that I’ve updated the “Understanding Money” section on the Orcam website.  My goal is to make this a comprehensive section of the site helping people better understand money, finance and economics.  If you have anything you’d like me to write about or if there are additions to the site that you… Read More

Understanding Your Real, Real Returns – Fee Edition

A recent post of mine discussed the importance of understanding your real, real returns (see here).  That is your return after fees and inflation.  We don’t usually hear about this return which is really strange because it’s the money that actually goes into your pocket.  The 10-12% nominal return we often hear about the stock… Read More