Pragmatic Capitalism

Capital for Living a More Practical Life

‘Myth Busting’

Are Individual Bonds Safer than Bond Funds?

The WSJ was out with a piece discussing outflows from DoubleLine’s Total Return Bond fund this week. One of the reasons for the outflows was cited as the lack of safety in a bond fund: Among those bailing are individual investors, who helped fuel the fund’s growth but can be quicker than institutions to pull… Read More

Indexing isn’t Just for Quitters

* Sorry for the brief hiatus. Life got in the way and I had to take some time off. All is better now in case anyone cares.   Here’s a good interview in Barrons with James Montier of GMO. But a few things really irked me about the interview. This is unusual for me since… Read More

How Do Indexers Do Better Than Average?

One of the more common investing myths is the idea that indexing is necessarily “average”.¹ It makes sense at first. If you bought all of the stocks in the market then you’d generate the average return.  It would be like playing fantasy football and picking all of the players in the NFL. You would lose… Read More

Indexing is the Result of Homogeneous Markets, not the Cause

As indexing strategies gain in popularity I am seeing a common selling point from active stock picking fund managers – the idea that more indexing creates more opportunity for active managers. This appears correct on the surface. After all, if everyone started using index funds then this would create a homogeneous set of product wrappers that cannot… Read More

Trump is Wrong on the National Debt

Donald Trump made some controversial comments the other day regarding the national debt. First, he said: “We’re paying a very low interest rate — what happens if that interest rate goes up 2, 3, 4 points?” he said. “We don’t have a country. We have tremendous debt, tremendous.” Second, he said: “I’ve borrowed knowing that… Read More