The Organization of Economic Cooperation and Development (OECD) was not created for the sole purpose of criticizing the United States. It just seems that way. It is an outgrowth from the Marshall Plan, which oversaw the allocation of American aid to rebuild Europe. Based in Paris, it was officially established in 1961 with 35 member-nations to “compare policies.” It has traditionally painted a picture of…
It was early in 1960, when I was a boy, that I recall studying the photographs in the now-defunct Life magazine about the dashing young lawyer named Fidel Castro, who ousted a corrupt dictator named Batista. My father told me that the corrupt dictator was taking from the poor and giving to the rich. In later years, as an economist, I learned that such a problem…
I remember hearing a sermon about ThanksgivingThe minister didn’t give thanks . . .for food or family. Instead,he was thankful forhis freedom to worship . . . or not,his freedom to pray . . . or not, andhis freedom to give thanks . . . or not. He said the mystery of Thanksgiving ishow is it possible thatthose with so much can be thankful for…
With the stock market in record high territory, you can guess the most common question: Is it time to sell? No, the stock market is high, but it is not nose-bleed high. While the charts for the Dow, S&P, and Russell are all similar, the chart for the Nasdaq is easier to see. Take a look at it: You can see it has fluctuated within…
One of the longest running debates in the investment community is whether passive investing is “better” than active investing. Passive investing involves trying to match a stock market index, such as the S&P 500 or the Nasdaq. Examples would be exchange-traded funds (ETFs) such as SPY or QQQ. Active investing tries to do better than the index. Examples are most mutual funds. ETFs are also…
Many of us were raised in austere, utilitarian households, where frivolity was discouraged. Your life should also be austere and utilitarian. There was little need for others in your life, aside from the obviously utilitarian value of procreation. Hermits were respected. Education also isolated us from each other by increasing our cynicism, especially the “scientific method.” Words are not to be trusted, because they…
The “Smartest People on Wall Street” were also surprised by the Trump election but have recovered enough to issue ten themes or expectations that might inform your investing decisions: “Expected returns: Only slightly higher.” (Probably!) “US fiscal policy: A pro-growth agenda.” (Only in the short-term . . ) “US trade policy: Concerns are likely overdone.” (Probably!) “EM risk: ‘Trump tantrum’ is temporary.” (EM = Emerging…
We tend to confuse normal business cycles with rallies. A business cycle reflects the expansionary and recessionary phases of the economy, usually in the neighborhood of four-to-six years. A rally refers to a recovering stock market (which should not be confused with economy) that occurs after a 30% decline in stock prices. In the last 116 years, we have seen thirteen rallies, averaging about nine…
The Market Price (MP) of a stock is equal to Earnings-Per-Share (EPS) times the Price-Earnings (PE) ratio. Conservative pundit and serious Supply-sider Larry Kudlow is fond of saying that “corporate earnings is the Mother’s milk of stock prices.” As corporate earnings increase, market prices should logically increase. (EPS is nothing more than the corporate earnings divided by the number of shares of stock.) A year…
Aleksandr Dugin is a Russian political scientist and has been given credit/blame for convincing Putin to invade the Ukraine. Indeed, he has been called “Putin’s Brain” by the highly-respected Foreign Affairs. Born in 1962, his father was a lawyer and senior military intelligence officer, while his mother was a doctor. Dugin eventually earned a PhD and taught at Moscow State University, until he was fired…
As is normal, I’ve been getting some ribbing about my election forecast that an unexpected Trump victory would cause the Dow to drop 500 points before rebounding in a week. This prediction was informed by the Brexit election in late June, where the pundits were wrong, and the FTSE tanked, only to be normal a week later. What happened here is that the U.S. pundits…
How can the stock market have a strong Clinton rally, followed by a strong Trump rally? One explanation of stock market behavior is uncertainty. When the market thought Clinton would win, uncertainty decreased, driving up the market. But, didn’t uncertainty increase with a Trump victory? Maybe not? Another explanation is the “true-believer” argument, i.e., that Republicans are rushing to put their money back into the…
I confess to believing that Clinton would win the election. So did Wall Street! The bloody aftermath today proves that. Readers will remember that I predicted, in the unlikely event of a Trump win, an immediate 500 point drop in the Dow, followed by a Brexit-like recovery in a week or two. I still believe that the stock market will recover from this in a…
Next Tuesday, I’ll vote in a presidential election for the 13th time. In every single election, it was described as the most important election in American history. Yet, after every single election, America survived. In every single election, my family has advised me that my vote should be for the “lessor of two evils.” In other words, there has never been a worthy candidate. Still,…
Some people get songs in their head and hear those songs constantly. Some thoughts get caught in my head, and I wish I could get them out. For example, Turkish President Erdogan said “democracy is like a street car – when you get to your stop, you get off.” What does that mean? Where is your stop? What is post-democracy? The senior Republican senator from…
It’s not nice to fool Mother Nature . . . nor the stock market, which hates uncertainty. I’ve written that the stock market has believed that Clinton would win the election since late Springtime. In fact, I predicted a 500-point drop in the Dow the next day, if Trump pulled-off an unexpected win. During that time (except for the Brexit Bear in late June), the…
Back during the 1980’s, I was a vice president with New York-based Citicorp, primarily lending for large commercial construction projects in Texas, whose economy was booming at the time. I’m proud to have financed construction of the iconic Infomart with $92 million of strip-funded eurodollars (see pic), as well as the very first Wyndam Hotel. There was so much construction that we joked the official…