it’s a lot easier to make good predictions about future macro conditions when you have a sound understanding of the monetary system as opposed to working from this mythological premise that drives so much of mainstream economic thinking these days.
Chart of the Day: Is the Expansion “Long in the Tooth”?
While we’re probably closer to the next recession than we are to the beginning of the recovery, it’s also important to remember that the business cycle seems to be getting longer and longer.
Did Market Monetarists Accurately Predict Low Inflation?
Correct conclusions don’t always mean correct reasoning.
Some Weekend Reading
Looking to catch up on some reading over the weekend? Here’s some nerdy stuff I’ve been catching up on:
“Smart Beta” & Smart Beta Hypocrisy
Smart beta is the new buzzword on Wall Street. No one really knows what it is because the term doesn’t have a specific definition, but the easiest way to understand what “smart beta” funds do is that they’re basically tweaking index funds to try to generate some extra return.
What if we all Know Less Than we Think?
“a man working w his cognitive apparatus has to know its limitations” – Charlie Munger
Rail Traffic Regains Upward Momentum
Warren Buffett’s favorite indicator of economic growth continues to gain momentum here in the early spring. The latest year over year reading from AAR shows a 9.3% increase in rail traffic. This brings the 12 week moving averaged to 5.7%, the highest reading since January.
Still Buying the (Golden) American Dream…
This recent Gallup survey on expected future returns of asset prices is pretty interesting. It shows that most Americans still think that owning a home is the best way to generate a high return in the future:
Chart of the Day: Showing up Late to the Party
The Investment Company Institute (ICI) began tracking flows into equity funds in 2007 which I have overlaid with the investor psychology cycle. In this manner, you can witness investor behavior in “real time.”