One of the hardest parts of the decision-making process in any endeavor stems from the fact that there are no counterfactuals. You can’t simply run a simulation and create a decision tree to show how different decisions and variables would affect the outcomes of each and every big decision you make. This leads to what…
Animal Spirits Episode 16: The Meltdown
On this week’s Animal Spirits with Michael & Ben we discuss: Our thoughts on the market correction. What happens when there’s nowhere to hide and correlations go to one. What we personally did, if anything, during last week’s sell-off. The countless reasons everyone is giving for the latest downturn. Why managed futures had such a…
The New Permanent Portfolio For Millennials
The original permanent portfolio was created by Harry Browne and consists of the following allocation: 25% in U.S. stocks 25% in long-term bonds 25% in gold 25% in cash The idea behind this portfolio is that it’s diversified enough to get you through a wide variety of economic and market environments and simple enough that even…
Some Random Observations On The Market Correction
Some random observations as things have gotten interesting once again in the stock market… This is the exciting part. It’s more fun when stocks rise but part of me can’t help but be excited by a market correction. Maybe this is because I work in the industry but the psychology of market downturns fascinates me to no…
The Drawbacks of Behavioral Finance During a Market Correction
The stock market got interesting again this week. Volatility is back after having gone missing for the past 18 months or so. I saw the following words spewed across the financial media this week: turbulence, fear, pain, panic, distress, agony. It’s still a little early for all of that. As of the close on Thursday,…
Yield Curve Inversions Aren’t Great For Stocks
There are no can’t-miss-works-every-time signals in the stock market or the economy. It’s never quite that easy. But inverted yield curves have been a fairly reliable indicator in the past in terms of danger ahead for stocks and the economy. I did a deep dive on what this could mean based on historical observations in…
Animal Spirits Episode 15: The Noobwhale
On this week’s Animal Spirits with Michael and Ben we discuss: Why the crazy volatility in stocks shouldn’t be that surprising. The hidden risks in alternative investments. Why private equity is riskier now than it was in the past. Does it make sense for financial advisors to play the money managers selection game? Is picking…
It’s Not Too Late
Stocks have gotten hammered over the past 10 days or so, culminating in that 4% woosh down yesterday. These things happen but it’s never easy to deal with from a psychological perspective. Stocks were getting hammered again in overnight futures but as I type this they’re up down up down all over the place. When…
The Expectations Game
In the latest episode of our podcast, Michael and I discussed the relationship between corporate earnings and stock market performance. I’ve done some work on this in the past so I went through and updated my data on earnings growth versus stock market returns by decade: It may also be helpful to view these numbers…
The Vanguard Endowment Model?
Useful benchmarking is one of the hardest things to do for institutional investors because of the way they structure their portfolios. Take a look latest asset allocations for college endowment funds from the annual study done by the National Association of College University Business Officers (NACUBO): Alternative investments are now the biggest allocation for all…
