The American Economics Association (AEA) is populated by mostly academics and is consequently more theoretical. I was a member exactly one year. The National Association of Business Economics (NABE) is populated mostly by economists working in the real world. NABE is NOT a bastion of liberal college professors, and I have been a member for many years. NABE just released their latest survey of members,…
Listening to the endless debate over gun violence, I am reminded of the difference between rifles and shotguns. A rifle fires one bullet at a time and is usually more accurate than a shotgun, which fires many small pellets. Our debate seems to search for a single “silver bullet” that will fix the problem of gun violence. There is no one solution to this complex…
It is important to know what you don’t know, and I know that there is much I don’t know about technology stocks. As a result, I am slow to invest in technology companies that I don’t understand. I did not buy Apple or Amazon when they first offered stock to the public. Maybe, that is because I have watched so many technology companies go public…
It has been almost a year since I predicted that President Trump would be impeached. That prediction was not made with any glee, as impeachments are painful for America and disturbing for the stock market. However, like all predictions, it is framed by certain experiences. First, at one time I was a division president in a huge real estate company, running the public syndication of…
Unlike many who lost respect for investment banking giant Goldman Sachs during the global financial crisis, I did not. Instead, I lost trust in them. Except for their research department, my conclusion has not changed. In their arrogance, I doubted they knew or cared about that loss of respect/trust. To my surprise, they set aside $500 million to “burnish their image,” primarily by lending to…
Nobody is smarter than the market . . . but sometimes the market is stupid. Two days ago, Walmart stock had their worst daily drop in 30 years, dropping over 10%, based on an unexpected squeeze in profit margin and a disappointing increase in the growth of online sales, which has increased 50% for each of the three previous quarters but only 23% last quarter. …
I remember a long-forgotten professor saying to his class that “if you cannot argue both sides of an issue, then you don’t really understand that issue.” Last night, I had the pleasure of listening to John Brennan, the former head of the CIA, as he spoke to the Norfolk Forum. Having served six presidents (three Republican and three Democrat), he discussed his conscientious effort to…
There has never been a time in my life that the massive conglomerate of General Electric was not one of the most respected companies in America. Sadly, since the stock hit $53 per share in 2000, it has repeatedly lurched downward and is only $15 per share today. The total market capitalization from dropped from nearly $600 billion to barely $130 billion now. Sad! Many…
Most people think existentialism is a dark, dour, and depressing philosophy, but I have always found its emphasis on absurdity and self-determination to be refreshing. Because I read most of the classic books on this subject years ago, I no longer look for additional books. However, I find myself reading Left Bank by Agnes Poirier about “Art, Passion, and the Rebirth of Paris 1940-50.” Paris was…
Economists often joke that a president gets more credit than he deserves for good economic times and more blame than he deserves in bad economic times. This reflects the fact that long term trends affect things more than any one occupant of the White House. Consider this: 1. Thirty years ago, the homicide rate in the U.S. was 8.5 per 100,000. Today, it is only…
It was July 18th of 2015 when I took the measure of Donald Trump . . . as a man. That was the day he needlessly attacked and trashed a personal hero of mine, i.e., John McCain. It doesn’t matter to me what the Mueller investigation eventually concludes, as I already know all I need to know about Trump . . . as a man. …
In the beginning, there was the Austrian school of economics, which argued that government tax revenues must equal government expenses every year. The problem was that Austrian economics is “pro-cyclical,” i.e., it makes cycle highs higher and cycle lows lower. The only time the government can increase its spending is when revenues are rising, which is when the economy is already improving. Conversely, when the…
I like guns. I like the way they feel. I marvel at the engineering of them. I appreciate the fine milling and the workmanship. I respect the power they constrain. I like guns and own plenty of them. But, I hate and loathe the National Rifle Association. They don’t understand me, and they don’t represent me. They are traitors to the Second Amendment! The world…
Except for their excellent research department, I have not respected investment giant Goldman Sachs since 1981, and that opinion was affirmed in 2008. Therefore, it pains me to agree with their CEO, Lloyd Blankfein. The governmental tools to govern the economy fall into two categories, i.e., monetary policy and fiscal policy. Monetary policy is controlled by the Federal Reserve, using interest rates and money supply. …
In the wee hours this morning, Dow futures indicated the market would be up about 150 points. After the release of the latest inflation data, the futures dropped to negative 350 points — a swing of 500 points. That’s ridiculous! Like I said in my last article for Inside Business, inflation is breaking out. Paul Volcker was chairman of the Fed from 1979 to 1987,…
Most investors think the stock market is a cold, heartless place without emotion. Not true! Warren Buffett says the market has two emotions, i.e., fear and greed. He suggests you should be fearful when others are greedy, but be greedy when others are fearful. Good advice! But, those two emotions are not equal in strength. Fear overwhelms greed for probably 99% of investors. If I…
America became poorer last week. She lost two more members of the Greatest Generation — two great Americans, who were also two great guys. Both achieved better than ninety years of life. One was a tall, aristocratic doctor from New England, who radiated good humor. The other was a shorter, muscular waterman from Ocean View, who radiated sincerity. Certainly, they were different in many ways. …
Most people have a strong fear of recessions, which are just routine characteristics of economic growth. Recessions remove inefficiencies from the economy. Losing your job is more worrisome than any temporary drop in portfolio values. However, a financial crisis is a much more worrisome event. They happen quicker, hurt worse, and take longer to recover than a typical recession. That’s what happened during the global…
While I am often called an economist, I have never been called a technologist or computer engineer. Technology is a “black box” that absorbs power, perogatives, and flexibility from people, especially the regulators. The stock market gyrated wildly yesterday. The Dow spent the day in a roughly thousand point range, from down 500 points to up 500 points. While that alone is highly unusual,…
Concluding that a high-speed car crash was caused by high speed is a bit simplistic. The high speed was just a symptom of too much pressure on the accelerator or gas pedal. Concluding that the current stock market correction was caused by rising interest rates is also a bit simplistic. True, rising interest expense decreases net income, thereby making the stock less valuable. But there…
Those readers with gray hair may recall when cars had a manual transmission. To shift gears, you had to push in the clutch. When you did so, the car temporarily slowed. The stock market is shifting into a higher gear, and the clutch is now pushed in. It is shifting from the sugar-high of low interest rates in a one-trick-pony-world where the U.S. was growing…
Yesterday was the eighth time the Dow Jones Industrial Average (DJIA) dropped 600 points or more. How soon we forget! The last time was in 2016 when the Brits voted for Brexit. Most of the drops were in the 2008/9 global financial crisis. I hope it drops another two thousand points! Stock market corrections of 10% or so are actually good for the market. A…
