Don’t rush into permanently closing Gay Street

David MoonBlog

The city of Knoxville recently announced a four-weekend partial closure of Gay Street, prohibiting vehicles between Wall and Union Avenues. This is supposedly a feasibility test, studying the creation of a more pedestrian-friendly city, less predominated by cars and roads. If you like the revamped Cumberland Avenue, you will love closing Gay Street. We close downtown streets all the time for very popular special events, such as the USA CYCLING National Championships. Those are fantastic. For years, the city closed essentially all of Gay Street and a number of other downtown streets for an evening called “Saturday night on the … Read More

SBF fraud trial entertaining, educational

David MoonBlog

It was fascinating drama when accused crypto-fraudster Sam Bankman-Fried took the stand in his trial this past week, but it also provided some pretty useful reminders about investing, decision-making and human behavior in general. After spending years intentionally crafting the illusion of an eccentric genius and hands-on business mogul, the 31-year-old Bankman-Fried spent his first day of testimony describing how he relied on others to make the critical decisions about risk management and investor protections. Under cross examination the next two days, the boy wonder responded to most questions with a variation of “I don’t remember.” Bankman-Fried is the only … Read More

Incentives drive trade and economic decisions

David MoonBlog

Business schools teach our future leaders of industry that countries should engage in trade with partners that have lower opportunity costs to produce specific goods and services. That is, standards of living will increase in both countries when the U.S. imports sneakers from Indonesia and exports soybeans to the country. I believed this economic theory for years, mostly blindly accepting one important assumption: decision-makers in each country seek to maximize overall wealth and living standards in each country. That’s the theory, anyway. And it’s mostly true most of the time. But it is definitely not always true all of the … Read More

War a poor predictor of stock prices

David MoonBlog

Compared to the profound effects war has on the lives of the combatants, their families, and civilian victims, the financial ramifications of war are insignificant. Plenty of the aspects surrounding war reasonably raise, if not require, concern. Don’t include the stock market on that list. There is essentially no correlation between stock returns and sustained U.S. involvement in armed conflict. Beginning with the Spanish-American War in 1898 and ending with the second Iraq War (2014-2021), the U.S. has been involved in 10 sustained military actions around the world. The average return of the U.S. stock market during those wars was … Read More

Both parties love shutdowns

David MoonBlog

As any high school civics student should be able to explain, the U.S. Congress is required to pass a budget for operating the federal government each year. Except it doesn’t. Congress last passed a full and timely operating budget 26 years ago, in 1997. I think most families should operate with an annual and monthly budget. That any entity would spend 30% more than its revenues – and do so repeatedly without a budget – is idiocy. It is malpractice. No business could survive with such an irresponsible spending approach. Then why would Congress essentially schedule these shutdown “battles” each … Read More

The perils of overconfidence

David MoonBlog

A recent study from Charles Schwab reaffirms what you have read multiple times but might still be tempted to test. Even if you could repeatedly guess the best time to invest your money into the stock market, the benefits of doing so are minimal, especially when compared with a simple system based on historical probabilities. The Schwab study looked at the past 20 years and assumed an investor had a new $2,000 available to invest on January 1 each year. If that hypothetical investor was brilliant and could identify the stock market’s lowest point each year and invested his $2,000 … Read More

China weakness, not its strength, may pose more US risk

David MoonBlog

It’s taken a few decades, but I finally realized that Mark Twain was right; most of the things we worry about never happen. This axiom holds reasonably true with respect to economic matters, as well. The most threatening economic risk is seldom the thing that dominates the headlines. If everyone is worried about a concern that is widely televised, those expectations are likely already built into consumer, employee and management behavior. A year ago, news stories overwhelmingly warned that the world was headed for a recession. Those worries seemed to culminate in a July 7, 2023 CNBC headline that reported … Read More

Borrowers plan repayment boycott

David MoonBlog

A recent survey conducted by think tank Intelligent.com asked student loan borrowers how they plan to deal with the almost four-year suspension of student loan payments that is set to expire next month. A whopping 62% of those surveyed said they are likely to boycott making loan payments. I never knew that ignoring a contract was an option, at least not without consequences. In about a two-week period in March 2020 we collectively discarded hundreds of years of established societal norms and tried to reconstruct a world that could withstand the unknowns of the emerging pandemic. Whether intentional or not, … Read More

NCAA seeks help in restraining trade

David MoonBlog

Each fall, I welcome the start of college football season by writing about one of the 3 most morally corrupt organizations on earth: the NCAA. This year, I have the unique opportunity to include one of the other two immoral organizations in my annual kickoff column, as the U.S. Congress has decided that college athletics needs the type of well-oiled moral leadership that only a group Washington politicians can provide. Proposed legislation in Congress would create laws regulating the name image and likeness (NIL) money that college athletes are allowed to earn and receive. Since the U.S. Supreme Court exposed … Read More

Deep dive into CPI data

David MoonBlog

When I recently wrote that the Consumer Price Index (CPI) had increased 17.5% since before the pandemic, I received emails from readers challenging my data; they explained that their expenses had increased a lot more than 17% in the past 3.5 years. So, I checked my figures. From January 2020 through June 2023, the CPI increased 17.5%, so my data was accurate. But while I reported the correct data, depending on how you spend your money, it may have been terribly misleading. I looked a little closer at the CPI calculation, to see which components have experienced the biggest and … Read More