David McWilliams from the Financial Times had quite the headline on Friday: Quantitative easing was the father of millennial socialism He cites a number of studies that show a majority of young people prefer bigger government and he places the blame squarely on the Federal Reserve: Ten years ago, faced with the real prospect of…
Ben Carlson
The Worst Entry Point in Stock Market History?
The 35 year period from 1930 to 1964 produced a total return of 2234% or 9.4% on an annual basis for the S&P 500 index. The 35 year period from 1965 to 1999 produced a total return of 5947% or 12.4% on an annual basis for the S&P 500 index. The 19 year period from…
Why Are People Miserable at Work?
Small talk has never been my thing. When you meet someone new I’d estimate 90% of conversations begin with the following question: “So what do you do?” Very few people care about the answer but this has turned into a cultural norm in recent decades. Work is ingrained in our identities in many ways. Derek…
Animal Spirits Episode 70: The Rich Man’s Disease
On this week’s Animal Spirits with Michael & Ben we discuss: The meaning of work Why working more is making Americans miserable Smartphone addiction Warren Buffett’s latest shareholder letter Does Buffett make it sound too easy? The greatest investor you’ve never heard of The insane rally in the stock market What matters more — performance…
What’s the Return on Mortgage Prepayments?
A reader asks: Putting aside the opportunity cost of the financial markets and 401k contributions and focusing only on making early mortgage payments, are you really making 4%/year if you make early payments on your mortgage? Extra mortgage payments ($50k for example), if paid early would only pay off the last scheduled payments of your…
Cherish Your Exceptions
December was a brutal month for the stock market. Here are the daily returns through Christmas Eve (losses of 1% or worse in red): Not only was the S&P 500 down almost 15% for the month at this point, but it was in the midst of a bear market that began in late-September: Then a…
The Joke Should be the Outlier
“I’m a contrarian.” – Everyone Sportscenter was by far my most watched show growing up as a youngster. I would watch the same episode five times a day and wait patiently for a specific highlight or the Top 10 at the end of the show. I even loved the commercials about the show: …
Edges That Won’t Go Away
One of the most frustrating parts about the markets is the fact that edges tend to be ephemeral. Strategies that worked beautifully in the past can stop working from increased competition, changing market dynamics or more informed investors. I wrote about this idea earlier in the week using legendary investor and gambler Ed Thorp as an…
Animal Spirits Episode 69: Denominator Blindness
This week’s Animal Spirits with Michael & Ben is sponsored by YCharts: Mention Animal Spirits and receive 20% off your subscription price when you initially sign up for the service. We discuss: Flipping your home using Zillow How accurate are Zillow’s house price estimates? Why auto loans are not the canary in the coal mine Why everyone wants…
First Mover Alpha
Ed Thorp is arguably the best investor who never gets mentioned on the lists of history’s best investors. The investment strategies he developed at Princeton Newport are widely copied today but were new and innovative at the time. A researcher at his firm stumbled across the idea for statistical arbitrage in 1979, a strategy employed by…
