Quietly quitting counterproductive to lower inflation

David MoonBlog

In the first half of 2022, the productivity of US workers declined by the sharpest amount ever – at least since the government began collecting this data in 1947. Economists are generally perplexed by the drop, with the most common speculative explanations to related post-shutdown reopening woes. I wonder if it has anything to do “quiet quitting.” Quiet quitting is when an individual doesn’t outright quit his job, but quietly refuses to do any more than the minimum required. It is about only doing an amount of work that you believe is commensurate to the pay you receive. A recent … Read More

My annual Thanksgiving week list of Irritants

David MoonBlog

Instead of another self-serving Thanksgiving week recitation of things for which some writer is grateful, in the interest of balance, here is my abbreviated annual list of irritants. Politicians who act like it’s their money when taking credit for a public project. People who see everything through a political lens. Joe Biden did not make your 401(k) decline this year, nor did he make it go up last year. Airplane passengers who put their bag in the overhead compartment above the second row, on the way to their seats on row 20. People who act as if they personally accomplished … Read More

Tom Brady recommended crypto company collapses

David MoonBlog

FTX Cryptocurrency Exchange is a business that allows people to buy and sell digital currencies and other digital assets. Less than two weeks ago, it was a $32 billion crypto behemoth with celebrity endorsers such as Tom Brady (NFL) and Stephen Curry (NBA). Today the company is bankrupt, its founder Sam Bankman-Fried is sheltering in the Bahamas and its customers can no longer withdraw money (either actual money or digital dollars) from their accounts. Several sources report that up to a billion dollars of customer funds are missing. It’s not necessary to understand what a cryptocurrency exchange is to grasp … Read More

Football game highlights common investment error

David MoonBlog

When Alabama lost an overtime football game to LSU last Saturday, sportswriters roundly criticized Crimson Tide head coach Nick Saban for attempting two-point conversions twice in regulation – both of which attempts failed. In criticizing Saban’s decisions, commentator Paul Finebaum said the 71-year-old coach looked lost on the sidelines. Don’t take investment advice from Paul Finebaum. Statistically, each of Saban’s two-point attempt decisions was the correct decision, even though neither resulted in in Saban’s desired outcome. Finebaum is guilty of a fairly common error: equating the quality of a decision with the desirability of the outcome. This type of thinking … Read More

Midterm elections most expensive in history

David MoonBlog

Candidates and their supporters will raise and spend a record $9.7 billion in this year’s mid-term federal elections. Some of that money is almost certainly donated by persons interested in supporting fair and free elections but forgive my overwhelming skepticism. If donors were simply interested in fostering democracy, incumbents wouldn’t receive the overwhelming majority of donations, even those in uncontested races. Senate majority leader Chuck Schumer (D-NY) is expected to beat his Republican challenger by double digits yet has raised more than $40 million to fund his unlosable race – compared to raising only $16 million to fund his similarly … Read More

Yellen warning unnoticed, troublesome

David MoonBlog

Treasury Secretary Janet Yellen was recently answering questions at something called the Second Ministerial Roundtable Discussion to Support Ukraine. I must admit missing the First Ministerial Roundtable, but I suspect I have plenty of company, since Secretary’s Yellen’s comments at the Second Roundtable received such little publicity. That is especially strange – and concerning – given that Yellen’s comments were a warning of something reminiscent of the financial crisis of 2008, but potentially much worse. “We are worried about a loss of adequate liquidity in the market,” Yellen warned in typical economist-speak, noting that the overall supply of Treasury bonds … Read More

Officials flout existing trading laws

David MoonBlog

A recent investigation found that the president of the Federal Reserve Bank of Atlanta violated federal investment disclosure requirements. He also exceeded ownership limits on Treasury securities and placed trades on dates that were prohibited because the dates were too close to a Fed policy meeting. Raphael Bostic has been president of the Atlanta Fed since 2017 – and remains in that position despite the recent discovery of these violations of reporting requirements. He explained that he had merely misinterpreted the policies and never used nonpublic information to make an investment decision. Dr. Bostic, a graduate of both Harvard and … Read More

Wealth researchers confuse correlation and causation

David MoonBlog

Researchers in Spain recently published a paper finding that wealthy people live approximately four years longer than do poor people. The scientists described this as evidence that money allows people to essentially buy additional lifespan. Observers called the findings “groundbreaking,” offering more evidence of an additional hurdle faced by historically disadvantaged groups. I call it a conclusion searching for evidence – another example of confusing correlation with causation. It’s no surprise that wealthy people tend to live longer. Possible reasons might include their ability to purchase more nutritious food or purchase gym memberships. (Since this study was conducted in Spain, … Read More

Researchers saving math right, advice wrong

David MoonBlog

Research recently published in something called The Journal of Retirement recommends that most young people should not save for retirement. Instead, the authors conclude, rational individuals save and spend in an attempt to avoid sharp changes in their standard of living. This means that rational young people should spend all (or more than all) of their income, postponing retirement saving until middle age, when their incomes will presumably be higher. I’m sure the authors have really high IQs and that all the math in their paper is correct, but their conclusions are both wrong and potentially damaging. In their zeal … Read More

2022 Q3 letter

David MoonUncategorized

October 2022 Dear clients and fellow shareholders: Following the worst January-September stock performance in 20 years, worldwide equity indices have clearly entered into bear market territory. The US benchmark S&P 500 is down 25 percent year-to-date, with the Nasdaq Composite down a whopping 32 percent.  (Our stock portfolio has declined approximately 15 percent this year.) The biggest shock to many investors in the third quarter wasn’t the miserable return of the stock market; it was the revelation that the supposed risk mitigating portion of their portfolio – the “safe bonds” – turned out to be not quite as safe as … Read More