A reader suggested that while this pandemic continues, I keep an open diary on this site with frequent short entries focusing (though not exclusively) on investment and the markets. This is the first of these posts. Markets are less concerned about the virus itself than with the recessionary impact of the lockdowns and quarantines. That perspective … Continue reading COVID-19 Diary – Number 1 (April 1, 2020)
Computerized stock trading has played a not-insignificant role in recent violent stock market swings. Of course, behind these swings are the perennial drivers of market lurches: fear and greed. Fear rules whenever investors feel insecure or uncertain, but it’s greed’s turn when investors judge that the fear has created a buying opportunity that despite uncertainty … Continue reading The Computer’s Role in the Recent Wild Market Swings
The U.S. economy – and the rest of the world – is at the gates of a severe recession. The economic downturn is emerging neither from the COVID-19 virus nor from its threats of debility and death. It is the quarantines, the lockdowns, and the supply constraints that have created a powerful recessionary thrust, because … Continue reading An Update: The Covid-19 Recession
Let me begin by framing this essay with what is obvious: we, and the world, are in a highly fluid situation. With COVID-19 intensifying in the U.S., there has been clamoring for Washington to take action to protect the economy. The Federal Reserve (Fed) has just cut interest rates again (March 15). President Trump’s economics … Continue reading More on the Economics of the Coronavirus
As of this writing, markets have fallen more than 10 percent from their highs, almost entirely in a panic over the coronavirus. It seems the American public has also shown signs of panic. Emergency food packs have disappeared from store shelves and some towns have objected to sick people getting treatment locally. While some investors are … Continue reading Market Panic Over the Coronavirus
I recently received a question accompanied by an interesting description of an asset allocation debate. It gets to the nub of several investment principles underlying Bite-Sized Investing. To put my response in perspective, I quote from the communication. “A few years ago, I bought stock for my retirement account in one of the great computer-related … Continue reading A Question of Objectives and Asset Allocation
Recent news from Europe prompts a quick offer of perspective. The president of the European Central Bank (ECB), Christine Lagarde, recently announced plans to launch a digital version of the euro. The Banks of England, Japan, and Canada quickly made similar announcements, as did the Swedish Riksbank and the Swiss National Bank. All this follows … Continue reading What Are These Central Banks After?
A reader and good friend recently sent me an article by Robert Shiller, Nobel Laureate and Sterling Professor of Economics at Yale University. In it, Prof. Shiller uses his own tool for evaluating markets, the so-called C.A.P.E. price-earnings ratio, to make the case that markets are overpriced and that the current market rally is running … Continue reading The Good Professor’s Measure
After I voiced skepticism in my recent post about the Business Roundtable’s newfound interest in stakeholders (in addition to shareholders), readers have asked how we could judge –– with hard, meaning statistical evidence –– whether the decision-makers in these firms really do consider all stakeholders. The short answer is that it would be all but … Continue reading Why We Should Be Careful With Statistics
Not too long ago, the Business Roundtable shocked both the business and the political communities when it revised its statement on corporate responsibility. The Roundtable, composed of the chief executive officers (CEOs) of 181 of the nation’s major corporations, stated that companies are responsible not only to their shareholders, but also to a broad array … Continue reading What Motivated the Business Roundtable to Move to the Left?