These may be small beans to you but are high-water marks for me:
1. lifetime clicks went over 15,000. First of all I know that's not all that big. Second of all, 13,000 of those clicks were probably me, maybe 500 were my sister and the rest were Russian hacker-bots with a few left over at the end for David, Corey, and Tadas and a couple others.
2. A single post finally cracked the 1000 click mark. I thought it was going to be my retirement as hurricane planning post (2nd place with 862) but it was my tongue-in-cheekish 2017 Best-of awards (1002 and climbing). I figure I could get an ad revenue stream of a few cents per month for volume like that.
QUOTE OF THE WEEK
There was another guy in the anteroom [where Harry Markowtiz was waiting for dissertation choice advice from his advisor]. He was a broker. We
started talking about why we were there, and he said, “Why don’t you apply
mathematical and statistical techniques to the stock market?” Some biographer later wrote, “That’s
the best advice a broker has ever given.” Harry Markowitz in 2016 interview.
RETIREMENT FINANCE AND PLANNING
Taming The Sequence Of Returns Beast In Early Retirement,
planinvestescape
“What can possibly go wrong?”, you ask yourself. The market
has been doing very well and seems on a never-ending upward trajectory. “The
stock market generally goes up”, the reassuring voice of the highly respected
blogger and author Jim Collins on the ChooseFI podcast ringing in your ear.
Then, “Boom!”. Or actually a dull thud
that got progressively louder. Four consecutive years of low or negative real
returns in your whole portfolio…
The risk of experiencing bad investment outcomes at the
wrong time, or sequence risk, is a poorly understood but crucial aspect of the
risk investors face—particularly those in the decumulation phase of their
savings journey, typically over the period of retirement financed by a defined
contribution pension scheme. Using US equity return data for 1872–2014, we show
how this risk can be significantly reduced by applying trend-following
investment strategies. We also show that knowing a valuation ratio, such as the
cyclically adjusted price-to-earnings (CAPE ) ratio, at
the beginning of a decumulation period is useful for enhancing sustainable
investment income.
For workers whose marginal tax rate remains roughly the same
throughout their lifetimes, a shift from traditional to Roth plans would have
at most a modest effect. But such a shift in saving would harm people whose
incomes decline significantly in their later years—precisely the people who
need the most help saving for retirement. For example, a worker who is in the 25
percent tax bracket today but who will drop to the 10 percent bracket in
retirement would much prefer to be taxed at a lower rate later rather than a
higher rate now. In those circumstances, the worker will have materially more
to spend in retirement if she can save through a traditional plan rather than a
Roth.
MARKETS AND INVESTING
Bearish market commentary that highlight risk conjure gravitas.
Bullish commentary often seems shallow. But remember, in the absence of
relevant data, the "base rate" probability is your best guide. 10%
market falls are a typical annual event but the stock market finishes better
than that an overwhelming 87% of the time.
Investors can, likewise, remove emotions from their decision
making. One effective strategy is to enter exit conditions at the time of
entry. If the prices rises, the stop-loss is raised; winners are allowed to
run, the impulse to seek gratification is delayed. If price falls, the sell
order is executed; risk is clearly defined, the regret premium is eliminated.
In this way, the decision to sell is made before emotions like pleasure,
disappointment and regret can be experienced. Strict rules-based investing is
simple in concept but often difficult in practice. However, bad investment
decisions very often result from allowing our emotions to over rule the basic
mechanics that guide risk/reward.
Stock Market Forecast, 2018-2043. forbes
The past: a 7% real return. The future: 3%.
An Interview with Nobel Laureate Harry M. Markowitz , cfa
pubs 2017
There was another guy in the anteroom. He was a broker. We
started talking about why we were there, and he said, “Why don’t you apply
mathematical and statistical techniques
to the stock market?” Some biographer later wrote, “That’s
the best advice a broker has ever given.”
Harry Markowitz in 2016 interview.
Eight centuries of the risk-free rate: bond market reversals from the Venetians to the ‘VaR shock’, Bank of England 2017.
This paper presents a new dataset for the annual risk-free
rate in both nominal and real terms going back to the 13th century. On this
basis, we establish for the first time a long-term comparative investigation of
‘bond bull markets’. It is shown that the global risk-free rate in July 2016
reached its lowest nominal level ever recorded. The current bond bull market in
US Treasuries which originated in 1981 is currently the third longest on
record, and the second most intense. The second part of this paper presents
three case studies for the 20th century, to typify modern forms of bond market
reversals. It is found that fundamental, inflation-led bond market reversals
have inflicted the longest and most intense losses upon investors, as
exemplified by the 1960s market in US Treasuries. However, central bank (mis-)
communication has played a key role in the 1994 ‘Bond massacre’. The 2003
Japanese ‘VaR shock’ demonstrates how curve steepening dynamics can create
positive externalities for the banking system in periods of monetary policy and
financial uncertainty. The paper finally argues that the inflation dynamics
underlying the 1965–70 bond market sell-off in US Treasuries could hold
particular relevance for the current market environment.
ALTERNATIVE RISK
The Tumult in MLPs, sl-advisors
linking MLP operating performance to oil is in most cases
futile…The continuing shift from income-seeking to growth-oriented investors is
disruptive …, and is a major theme driving recent returns… We continue to scour
for tangible justifications behind the recent move, so far with limited
success. We’ve talked to investors in the last week who are buying, holding and
selling…a correctly constructive view on oil prices has been destructive…Market
timing is rarely easy, and so we remain invested because valuations are more
attractive in energy infrastructure than any other sector. Don’t use leverage.
Pick companies and sectors with strong balance sheets.
What to Know About Structured Notes, John Rekenthaler
The advantage of structured notes is obvious: They can do
what the buyers wish….[otoh] To date, structured notes have primarily been sold
by banks, to either institutions or their personal-wealth clients. This
approach has had two effects. One is that structured notes have operated in
near-secrecy. They are not publicly traded securities, listed on exchanges,
about which information from the SEC's databases is readily available. They are
privately offered issues. If you want to learn about a structured note, you'll
have to hunt down its term sheet…For structured notes to become a meaningful
investment segment in the U.S. ,
they need a jailbreak. They need to be distributed by parties other than banks
and for their information and trading to be centralized.
SOCIETY AND CAPITAL
But for what it's worth, let's take the estimate of 9.78
billion hours of paperwork burden in 2015 and put it into a little perspective.
As a round-number estimate, say that a full-time employee works 2000 hours per
year (that is, 40 hours/week and 50 working weeks in a year). If you divide the
9.78 billion hours by 2000 hours/year worked, it's the equivalent of 4,890,000
full-time jobs.
In the last quarter century, more than 1.25 billion people
escaped extreme poverty - that equates to over 138,000 people (i.e., 38,000
more than the Parisian crowd that greeted Father Wresinski in 1987) being
lifted out of poverty every day. If it takes you five minutes to read this
article, another 480 people will have escaped the shackles of extreme of
poverty by the time you finish. Progress is awesome. In 1820, only 60 million
people didn’t live in extreme poverty. In 2015, 6.6 billion did not.
Since 2000, different measures of top income inequality have
exhibited very different trends. Top income shares based on measures of total
income show a continued rise, whereas top income shares based on wage and
salary income show no increase in inequality post-2000. The most important
difference between these two measures of income is the income that accrues to
S-corporations. Moreover, the majority of the recent increase in top income
shares is due to an increase in average earnings at very high income levels,
much higher than that assumed in typical discussions of top income inequality.
Once incomes above the 99.99th percentile are excluded (around $7 million in
2012), we see that little continued growth in top income shares has taken place
in the last 20 years. Put simply, so far in the 21st century, all the action in
top income shares has been S-corporation income at very, very high income
levels.
Most, if not all the systemic risks facing today’s bull run
can be traced back to the escalation of inequality. Inflation has remained
stubbornly low as globalization and automation deprive the bottom 60% of
wage-negotiation power. Household debt has spiked above pre-Global Financial
Crisis (GFC) levels with few signs of moderation on the horizon. Meanwhile, for
the top 40%, wealth accumulation is driving an ever- aggressive search for
yield in a low-growth world — the helium inflating the “everything bubble”. And
these risks are maturing against a backdrop of intensifying socio-political
instability — a class divide that could derail American progress and
competitiveness.
$63 Trillion of World Debt in One Visualization,
visualcapitalist.com
Some Watery Economics, Tim Taylor
The quantity of fresh water on planet Earth doesn't change
much over time, but the demands on that water and how it is distributed can
cause considerable stress. A group of World Bank authors--Richard Damania,
Sébastien Desbureaux, Marie Hyland, Asif Islam, Scott Moore, Aude-Sophie Rodella,
Jason Russ, and Esha Zaveri--provide an overview of the global situation in
"Uncharted Waters: The New Economics of Water Scarcity and
Variability" (October 2017).
How Universities Are Failing Finance Students,
institutionalinvestor
“The presence of financial academia is fading, something
that was unthinkable 10 years ago,” writes López de Prado. “The edge is not yet
another reincarnation of the capital asset pricing model,” he says. It’s in
analyzing untapped data sources, such as satellite images of crops and tunnel
traffic, via techniques learned outside the classroom. FinTech, big data,
machine learning, and even quantum computing will render formal finance
education even more irrelevant, he believes…López de Prado is a creature of both, the Venn
diagram where PhDs meet profit margins. And he’s far from the first to discover
it. “Firms like Renaissance, D.E. Shaw, and PDT have delivered returns of 10 to
30 percent every year,” says another academic who declined to be named.
“There’s no academic model that can deliver such returns. That’s industrial
research.”
How Islamic Finance Can Save the Global Economy,
InstitutionalInvestor.com
You can’t make money from money forever: The case for the
Islamic financification of global markets.
there are some things we can do on our own. For example, we could avoid
excessive speculation. We could limit our use of leverage. We could stop
encouraging people to sell things they don’t own. We could avoid investing in
firms that rely on interest revenue or that carry a lot of debt. We could make
a pact to generate all of our investment income through shared business risk.
We could ensure that every transaction we make in the financial markets has a
real object tied to it. And last, the further we got from a simple
“thing-for-thing” trade, the more time we could spend understanding the
implications and incentives being created. [this is a more interesting topic than the writer is able to convey...]
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