LPL Financial analyzed 25 major geopolitical episodes, dating back to Japan’s 1941 attack on Pearl Harbor. “Total drawdowns around these events have been fairly limited,” Jeff Buchbinder, LPL’s chief equity strategist, wrote in a research note on Monday. (Full recoveries often “take only a few weeks to a couple of months,” he added.) Deutsche Bank analysts […]
Markets are forward-looking
Markets are forward-looking
18 Jun 2025 1 Comment
in applied price theory, defence economics, econometerics, economic growth, economic history, financial economics, macroeconomics, market efficiency, politics - USA, war and peace Tags: efficient markets hypothesis, World War II
The 3.5 percent remittance tax
25 May 2025 1 Comment
in development economics, financial economics, Public Choice, public economics Tags: remittances
Trump has been talking about this. I am not sure what version of the idea we might end up with, but let’s consider the idea in its abstract form. Let’s also put aside money laundering issues, and talk about “simple remittances.” The United States has a partial monopsony power over Latino (and often other) migrants, […]
The 3.5 percent remittance tax
US Holders of Foreign Assets, Foreign Holders of US Assets, and Exorbitant Privilege
18 May 2025 Leave a comment
in financial economics, macroeconomics, monetary economics
US investors put money in assets of other countries, including “portfolio investment” which focuses on ownership of stocks and bonds without a management interest, and “foreign direct investment” which is owning enough of a foreign company to have a management interest. Conversely, foreign investors put money into US dollar assets in the US economy. Erin…
US Holders of Foreign Assets, Foreign Holders of US Assets, and Exorbitant Privilege
Buffett’s Alpha
05 May 2025 Leave a comment
in entrepreneurship, financial economics Tags: active investing
Berkshire Hathaway has realized a Sharpe ratio of 0.76, higher than any other stock or mutual fund with a history of more than 30 years, and Berkshire has a significant alpha to traditional risk factors. However, we find that the alpha becomes insignificant when controlling for exposures to Betting-Against-Beta and Quality-Minus-Junk factors. Further, we estimate […]
Buffett’s Alpha
In Praise of the Danish Mortgage System
30 Apr 2025 Leave a comment
in applied price theory, entrepreneurship, financial economics
When interest rates go up, the price of bonds goes down. As Tyler and I discuss in Modern Principles, the inverse relationship between interest rates and prices holds for any asset that pays out over time. In particular, as Patrick McKenzie points out, when interest rates go up, the value of a loan goes down. […]
In Praise of the Danish Mortgage System
Why the housing market imploded
29 Apr 2025 Leave a comment
in applied price theory, behavioural economics, economic history, economics of information, financial economics, global financial crisis (GFC), great recession, macroeconomics, monetary economics
In a recent paper, Christopher L. Foote, Kristopher S. Gerardi, and Paul S. Willen report (pdf): This paper presents 12 facts about the mortgage market. The authors argue that the facts refute the popular story that the crisis resulted from financial industry insiders deceiving uninformed mortgage borrowers and investors. Instead, they argue that borrowers and […]
Why the housing market imploded
When Genius Failed
10 Apr 2025 1 Comment
in applied price theory, business cycles, economic growth, economics of information, economics of regulation, entrepreneurship, financial economics, global financial crisis (GFC), history of economic thought, industrial organisation, macroeconomics, politics - USA
Myron Scholes was on top of the world in 1997, having won the Nobel Prize in economics that year for his work in financial economics, work that he had applied in the real world in a wildly successful hedge fund, Long Term Capital Management. But just one year later, LTCM was saved from collapse only […]
When Genius Failed
At the end of World War I, Britain was in heavy financial debt to the U.S. The question of repayments would bedevil both countries for decades
27 Mar 2025 Leave a comment
in defence economics, economic history, financial economics, international economic law, international economics, International law, war and peace Tags: British politics France, World War I
See ‘Mellon vs. Churchill’ Review: The Payback Problem by Benn Steil. He reviewed the book Mellon vs. Churchill: The Untold Story of Treasury Titans at War by Jill Eicher. Excerpts:”In a nutshell, the debt story of the 1920s goes like this. Following World War I, 10 countries owed the U.S. more than $10 billion ($190 billion…
At the end of World War I, Britain was in heavy financial debt to the U.S. The question of repayments would bedevil both countries for decades
Beating the market
23 Mar 2025 Leave a comment
in econometerics, economics of information, entrepreneurship, financial economics Tags: active investing, efficient markets hypothesis, passive investing
SEC Climate Risk Rule is Entrapment
11 Mar 2025 Leave a comment
in economic history, economics of climate change, economics of regulation, environmental economics, environmentalism, financial economics, global warming, law and economics, politics - USA, property rights Tags: climate activists, efficient markets hypothesis
Stone Washington and William Happer explain the nefarious and ill-advised decree in their article SEC’s Climate Risk Disclosure Rule Would Compel Companies to Make Scientifically False and Misleading Disclosures. Excerpts in italics with my bolds and added images. In March last year, the Securities and Exchange Commission issued its climate risk disclosure rule, called “The […]
SEC Climate Risk Rule is Entrapment
Bernanke on inflation targeting
09 Mar 2025 Leave a comment
in applied price theory, budget deficits, business cycles, economic growth, economic history, financial economics, fiscal policy, history of economic thought, inflation targeting, labour economics, macroeconomics, monetary economics, politics - New Zealand, unemployment Tags: monetary policy
Former chairman of the Federal Reserve Board of Governors (and FOMC), Ben Bernanke, was yesterday the first of two keynote speakers at the Reserve Bank’s conference to mark 35 years of inflation targeting, which first became a formalised thing here in New Zealand. He indicated that he’d be speaking about inflation targeting in general and […]
Bernanke on inflation targeting
Driving a Stake Through Stakeholder Capitalism
07 Mar 2025 Leave a comment
in economics of climate change, economics of regulation, energy economics, entrepreneurship, environmental economics, environmentalism, financial economics, global warming, politics - USA Tags: climate activists, greenwashing, regressive left
E, S, G does not cover core financial risks. We’re looking to assess financially-relevant environmental, social and governance factors, not financially-relevant financial factors.” Got that? Yup. It’s total hogwash.
Driving a Stake Through Stakeholder Capitalism
BP Faces “Existential Crisis” After Ruinous Attempt to Go Green
02 Mar 2025 Leave a comment
in applied price theory, economics of climate change, energy economics, entrepreneurship, environmental economics, environmentalism, financial economics, global warming, industrial organisation, politics - USA, survivor principle Tags: 2024 presidential election, climate activists, climate alarmism, efficient markets hypothesis, greenwashing
BP’s green pivot has backfired spectacularly, hammering profits and leaving the company vulnerable to a hedge fund siege, writes Jonathan Leake in the Telegraph.
BP Faces “Existential Crisis” After Ruinous Attempt to Go Green
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