Intellectual Capital

There were a lot of investor surprises in 2022, most of them painful. The prices of high-flying tech stocks can decline, sometimes significantly. The current inflation is not transitory. Interest rates matter. Bitcoin isn’t the key to your retirement plan. But the most surprising shock for many investors in 2022 was that the supposed safe assets in their retirement plans – the bonds – weren’t as safe as they had assumed. While the S&P 500 stock index declined 19 percent in 2022 (its worst decline since the 2008 Great Recession), the price drops in many bonds and bond funds were … Read More

If telling a trusted person your goals can create a useful accountability, perhaps sharing mine with everyone will be even more powerful. Or maybe one of my 2023 resolutions will be useful to someone else – either as a possible goal or something to avoid at all costs. I am going to write more this year. I am going to journal 15 minutes a day and start a new book. And I am going to write one personal note to someone each day, even if only to say hello. Text less and call more. Avoid social media. Go to more … Read More

On the outside chance Santa hasn’t completed his 2022 naughty and nice list, I’ve made some notes that he might find helpful. First, the naughty list. Sam Bankman-Fried and anyone who benefitted from the money he stole. That includes Tom Brady, Stephen Curry, Trevor Lawrence, Shaquille O’Neal, Matt Damon, Kevin O’Leary and Larry David. And scores of politicians, all of whose names we don’t yet know. Theranos fraudsters Sunny Balwani and Elizabeth Holmes. Bill O’Reilly and Brett Farve. BLM executives who used donated funds as their personal piggy bank. Janet Yellen and anyone else who so confidently spoke of transitory … Read More

The directors of the Federal Reserve Bank of Chicago recently selected University of Chicago professor and former Chairman of the Council of Economic Advisors, Austan Goolsbee, to become the new president of the Federal Reserve Bank of Chicago in January. Although Goolsbee will be only one of 12 presidents of regional Federal Reserve banks, his appointment is a watershed event, not only for the central bank, but for the entire U.S. economy. Dr. Goolsbee’s selection as one of the people tasked with helping develop our country’s monetary policy is an open and obvious admission that, despite its supposed independence, the … Read More

If you tell me your politics, I can probably guess what you believe are the root causes of inflation. Republicans blame Joe Biden, Covid relief checks, increased deficit spending and the Federal Reserve. Democrats blame Vladimir Putin, Covid shutdowns, PPP loans/grants and (my favorite explanation of all) corporate greed. All these explanations are right, at least partly so. Except for the corporate greed one. Do people really believe that executives at ExxonMobil, Home Depot and Kroger suddenly woke up one morning two years ago and thought, “maybe we should try to maximize our profits?” While it manifests differently in different … Read More

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

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

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

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

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