Pragmatic Capitalism

Practical Views on Money & Finance

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This Ain’t Your Grandfather’s Hedge Fund Industry

This Bloomberg piece about hedge funds created quite a stir today. The basic gist of the article was – hedge fund performance is bad and they charge high fees which makes them really bad.  It’s easy to jump on this bandwagon, make a bunch of oversimplifications and come to the populist conclusion that hedge funds… Read More

What is Portfolio “Risk”?

The idea of risk is a rather confusing and nebulous concept in modern finance. The traditional textbook definition of “risk” is standard deviation or volatility. This is convenient for academic purposes because it allows us to quantify risk in a portfolio. But this is a flawed concept for several reasons: Volatility isn’t always a bad thing. In… Read More

The China Slowdown in Perspective

Last month it was Greece. This month it seems to be China. I said Greece wouldn’t wreck the global economy last month and now no one is even talking about it now. But what about China? China is a much bigger story for obvious reasons. As of 2014 China was about 15% of global GDP… Read More

Is More Information Making Us Worse Investors?

Study after study has shown that retail investors and professional money managers just aren’t very good at investing. And the primary cause of this poor performance is being overly active and incurring lots of unnecessary taxes and fees.  The pros can’t control themselves because they have to impress their clients by trying to look active… Read More