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The Best of Pragcap in 2015

Well, another year is coming to an end.  It wasn’t a great one for the financial markets, but one thing that’s getting better and better is the sheer amount of free information being provided to investors helping them make smarter decisions every day.  I hope that this blog contributes a little bit to that process.

Here are some of the things I wrote in 2015 that I hope contributed to the pursuit of knowledge and better decisions in the world of economics and finance:

General Topics

Finance and Investing

  • What is Portfolio Risk? – An alternative perspective on the idea that “risk” is volatility or standard deviation.  In this post I establish a simplistic and realistic methodology for thinking about portfolio risk.
  • Why Countercyclical Indexing Makes Sense – I’ve developed some interesting research improving on the standard procyclical indexing approach utilized by most indexers.  This is the foundation for a big piece of research I am publishing in the next few months on portfolio theory and construction.
  • Someone is Always Outperforming Your Portfolio – a sensible view on the perpetual pursuit of the “best” performing asset managers.
  • Setting Realistic Investment Expectations – Another piece on having realistic expectations from the financial markets.
  • Problems with the Long-term and the Short-term – These two pieces discuss the temporal problems within the financial markets and help investors establish realistic expectations about holding periods and time horizons.
  • What is “cash” in a brokerage account? –  Combining my understanding of the monetary system with the financial world has been a huge help in understanding basic points about how to allocate assets.  2015 was a year of widespread confusion over what “cash” in a brokerage account is.  This piece clarified some of the errors.

Economics

  • Updated Version of Understanding the Modern Monetary System – This SSRN paper has become one of the most widely read pieces of research on the SSRN network and now ranks #7 all-time.  I try to update it every year to account for the fact that the monetary system is dynamic.  This year included some important updates.
  • Where Does Money Come From? – A brief piece describing “money” and where it comes from in a modern monetary system.
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