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Pragmatic Capitalism

Practical Views on Money, Finance & Life

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Are Index Funds Risky for Corporate Governance?

Here’s a provocative piece in today’s WSJ about index funds and how they are bad for corporate governance. This is one of many articles in a long line of attacks on index funds in recent years. The other arguments, generally trotted out by high fee active managers getting crushed by the rise of indexing, aren’t… Read More

Walk it Back, Random Walker

Big news, nerds – Burton Malkiel has changed his mind.  The investment legend, who has spent his entire life chastising alpha chasing active management, has moved over to the dark side. Malkiel, the Chief Investment Officer at Wealthfront has rolled out a new strategy that they’re calling “Passive Plus” indexing. The strategy is another name… Read More

Discipline vs Knowledge

Here’s a great post by Ben Carlson discussing the inadequacy of knowledge. He discusses the fact that, despite increased awareness and knowledge of weight loss and health, humans are getting heavier and less healthy.  It’s crazy to think that we can get smarter about something and yet the problem will become worse.  How does this happen?… Read More

The Era of Irrational Apathy

Here’s a great post from Josh about the stock market’s general apathy that got me thinking about the macroeconomic picture.  The post-crisis period has been a pretty extraordinary economic environment. What many people thought was a foray into a Great Depression style era has actually turned out to be a pretty amazing recovery. Check out… Read More

Your Best Investment

Tadas is continuing his finance blogger wisdom series all week so don’t forget to go back and check them all out. Yesterday’s question was one of my favorites: Question:  If you could (magically) impart one piece of wisdom to all investors what would it be? I said: “Your best investments are likely to be made… Read More

1,000 Years Worth of Market Data

I love this post by Tadas at Abnormal Returns asking the following: “If we had a 1,000 years of market data what kinds of things would get validated? What things would lack support in the data?” There are so many good responses in there. But here’s what I said: “1,000 years worth of market data… Read More

Chart of the Day – The USA is not a Corporation

Mary Meeker is out with her annual “Internet Trends” presentation and she continues to promote this very misleading view of the US government as a corporation. For instance, here’s a chart showing the “income statement” of the USA: Okay, let’s cut to the chase. Governments are not corporations. Corporations exist to increase shareholder value by… Read More

In Defense of Vanguard

Here’s an article criticizing Vanguard. I guess we need to get used to this. As low fee indexing continues to eat the world the high fee alpha salesman are going to have to step up their game or they’ll all go out of business. But this “takedown” is particularly bad. Let me explain. The article… Read More

Why Do People Like Balanced Budgets?

Here’s a great question from Joe Weisenthal’s morning update: I’ve spilled a lot of ink over the last decade talking about debt, deficits and sectoral balances. My broader points have been largely proven right over that time: The US government does not operate like a household or business and operates with an inflation or currency… Read More