COVID-19 Diary Number 2 (April 6, 2020)

Though no one can yet say how the virus will continue to develop in the U.S., and therefore how the markets will go, a review of the past few weeks can allow this conclusion (with apologies to Winston Churchill at the end of the Battle of Britain): This is not the end or even the …

COVID-19 Diary – Number 1 (April 1, 2020)

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 …

The Computer’s Role in the Recent Wild Market Swings

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 …

An Update: The Covid-19 Recession

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 …

More on the Economics of the Coronavirus

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 …

Market Panic Over 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 …

A Question of Objectives and Asset Allocation

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 …

What Are These Central Banks After?

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 …

The Good Professor’s Measure

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 …

Why We Should Be Careful With Statistics

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 …