August 2019

Smoking

Why Don’t More People Smoke?

Another prominent figure in the world of finance has declared passive investing a bubble.  Josh Brown has a good take on this here, saying that active investing is the true bubble.  I don’t think you can declare a decades-long phenomenon (as both active and passive investing have achieved) a bubble, but we can recognize that passive investing has changed the way people build wealth.  Passive investing has clear advantages over active management.  I won’t rehash it in this post, but if you’re curious I covered it here, here, and here.  It seems to me that the advent of passive investing is like the rise of health consciousness.  As we learned more about what we should (exercising) and shouldn’t (smoking) be doing, we have changed our habits.  The same is true about investing. Why Don’t More People Smoke? I recently went to the doctor and she asked me if I smoke.  My family…


No Picture

Fun with TINA

I’ve heard today’s investing environment described as TINA.  There Is No Alternative.  I don’t necessarily agree that this is the case, but the argument goes something like this: US Treasurys yield around 1.50% The rest of the world is yielding zero (or less!) US stocks yield 2% and the US economy is strong Equities outside of the US have sucked for a decade and their central banks have weak hands Through this incredibly limited view (that no one should use to invest actual dollars), there is no alternative to owning US equities, especially if you are investing for income.  This did get me thinking, though… Ten Years Ago Just for fun, let’s take a look at the 10-year Treasury and the S&P 500 as though they are the only two investment choices.  Ten years ago, the 10-year yielded 3.85% and the S&P yield was about 2%.  So $100,000 invested in…


No Picture

What Happened to the Recession?

Last week was recession week as the brief yield curve inversion launched a thousand headlines promising economic destruction.  Every newspaper had a recession headline or story above the fold.  Although there were several days of decent market swings, the recession story seems to have run out of gas as people looked at the actual numbers.  The minutes from the latest Federal Reserve meeting further cooled the rhetoric.  Journalists may have expected the last Fed meeting was Thunderdome as there was some disagreement among Fed members on whether to hike or not.  Instead, the minutes painted a much different view. So what do the minutes from the last Federal Reserve meeting say? Labor is strong and inflation is under control.  The rest of the world is struggling a bit, but it hasn’t made a huge impact on the US economy.  Trade policy uncertainty seems to be here to stay in the…