SSRN published their top 10 papers of 2015 and my paper Understanding the Modern Monetary System came in at #6. I’m incredibly humbled to be on a list like this where the names Fama, French, Asness and Faber are listed. Of course, many of these papers are old and so they end up on a list like this because they’re legacy papers that have stood the test of time. My paper was originally written in 2011 and has gone through a number of edits over time so I thought I’d offer up some more timely papers that I found useful this year. Perhaps as the year winds down you’ll find some time to browse a few of them. I hope you find them helpful. I know I did:
What Is an Index? – by Andrew Lo
As you likely know I’ve been on a bit of a kick with “benchmarks” and trying to explain some of the confusion between “active” and “passive” investing. In my mind, there is really only one global benchmark and anyone who deviates from the Global Financial Asset Portfolio is therefore engaging in “active” investing. We are all essentially “asset pickers” inside of this one aggregate portfolio. Knowing what an index actually is and how arbitrary the term is can be a good starting point for understanding what I am ranting about….
An Evaluation of Smart Beta, by Vanguard
Smart Beta was one of the hottest terms on Wall Street this year. Vanguard will help you understand what all the fuss was about (mostly high fee smart marketing if you ask me…).
Factor-Based Investing, by Vanguard
Another excellent explainer from Vanguard. I am not a big advocate of factor investing, but if you want to understand the fuss Vanguard has your back.
Why Indexing Works, by Heaton, Polson and Witte
One of the best and shortest papers of the year. As you likely know, I am a huge fan of indexing and this paper gets right to the point. Indexing works because it’s low fee, tax efficient and diversified. Enough said.
Secular Stagnation: The Long View, by Barry Eichengreen
Secular stagnation was all the rage in economics this year as Barry Eichengreen and Larry Summers put their full weight behind the concept. In this paper Eichengreen discusses four long-term factors that could drive the stagnation.
Reviving the Limit Cycle View of Macroeconomic Fluctuations, by Beaudry, Galizia and Portier
This was one of my favorite papers of the year. I’ve always liked the idea that busts are caused by booms. That is, expansions don’t die of old age, but of excess. This paper revives an old debate about what causes business cycle deviations and how booms might be the cause of busts.
The Allure of the Outlier, by Vanguard
Another great piece from Vanguard on the risks to consider when assessing alternative investments. As hedge funds and other alternative investments struggle to perform they are coming under increasing scrutiny. Vanguard explains many of the important factors to be on the lookout for.