I’ve written an embarrassing number of posts on this website over the last 6 years. Most of them probably aren’t all that useful, but every once in a world this blind squirrel catches a nut. Here are five of the more influential and popular things I wrote about this year:
1. Pragmatic Capitalism: What Every Investor Needs to Know About Money and Finance – I finally got around to publishing a book this year. I think it’s a unique piece of work in that I connect the worlds of finance and economics in a way that generally isn’t done. More importantly, the book covers some dense topics in an easily decipherable manner. I’m happy to say that the book seems to be making a difference in the way many people think about the world of money.
2. The Biggest Myths in Economics – This was by far the most popular post I wrote all year. In this post I dove into 11 of the most widely believed myths in the world of economics. The push-back was fierce, but I think this one opened a lot of people’s eyes about the operational realities of the modern monetary system.
- The Biggest Myth About QE
- Common Myths About the Federal Reserve
- A Cheat Sheet for Understanding the Different Schools of Economics
3. Understanding, well, Lots of Stuff – The best thing I did this year was update the Understanding Money page on the Orcam website. There is a huge amount of educational information here that will help people who are interested in money, finance and economics. If you haven’t been over there I highly recommend it.
4. Value Investing is Overrated – I spent a good deal of time this year talking about “value investing” and why I think the concept of “value” is often misleading and elusive concept that leads many investors astray. I don’t think I won over many people, but it was a popular discussion nonetheless. See also:
- This Might be a Stock Market Bubble, but Valuation Metrics Won’t Help you Understand That
- Why and When I Love Value Investing
- The Concept of Value is Dynamic
- You Too Can Become Warren Buffett
5. The Myth of Passive Investing – In my search to establish a cohesive and seamless financial and monetary perspective of the world I kept running into one big problem with the idea of “passive indexing” – if the market is some all knowing all seeing thing then why don’t any index fund investors actually invest in the markets in a manner that is consistent with this belief? That is, at the aggregate level there is only one “market portfolio” made up of all outstanding global financial assets. If the markets are so great at allocating assets then a truly passive investor would just take the market return and not deviate from this portfolio.
As I showed over the course of the year even the biggest advocates of “passive indexing” fail to eat their own cooking. Just today, Noah Smith wrote a piece about how asset picking is the new stock picking and last month the Wall Street Journal ran a piece on the myth of passive investing. I think the tide is changing here and people are beginning to see that there’s a lot more active elements in passive investing than most passive advocates would like you to believe. See also:
- Pragmatic Capitalism: What Every Investor Needs to Know About Money and Finance
- Debunking some Common Investment Myths
- The “Allocation Matters Most Hypothesis”
- The Active vs Passive Distinction is About Cost
- I Want to Crush the Efficient Market Hypothesis
- We Are All “Active” Investors
- It’s Time to Eliminate the Term “Passive Investing”
- Most Passive Indexers Also Underperform the Market
- John Bogle – Active Investor in Passive Clothing
- Most Index Funds are Macro Funds
- Putting the “Underperformance” of Active Managers in Perspective
- Of Course 80% of Active Managers Underperform the Market!
- There’s no Such Thing as “Forecast Free” Investing
- The Importance of Understanding Your Implicit and Explicit Forecasts
- The Importance of Understanding Your General Portfolio Framework
- The Contradiction of “Passive” Index Fund Investing
- Is the Global Financial Asset Portfolio the Perfect Indexing Strategy? – Part 1
- Is the Global Financial Asset Portfolio the Perfect Indexing Strategy? – Part 2
- Why the Active vs Passive Debate is the Most Important Debate in Finance
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.