Good Sunday morning. Some intellectual stimulation to prevent your brain from atrophying over the weekend:

• This is no time to get off the equity train (FT) but see Stock market’s continuing climb worries some Wall Street experts  (LA Times)
The Never List: Never sell a service that you cannot deliver. Never work for someone who isn’t as smart as you are. Never work for or with people with a lesser moral code than your own.  (TRB)
• Eugene Fama, King of Predictable Markets (NYT)
Dan Gross: Amazon Stock May Be Up, but the Company Still Doesn’t Make Any Money (Daily Beast)
• Does Studying Economics Breed Greed? (Psychology Today) see also Economists are horrible people, study says (Salon)
• Japan’s Yankee genius, the greatest scientist you’ve never heard of (New Statesman)
• Apple’s big iPad problem: How do you convince owners to upgrade when their old machines work just fine? (Yahoo)
• David Byrne: Will Work for Inspiration. (Creative Time Reports)
• 39 Ways to Live, and Not Merely Exist (Dumb Little Man)
• Finding Time to Read (Farnam Street)

Whats for brunch?


Consumer sentiment took a huge hit in October
Source: Reuters


Category: Financial Press

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

12 Responses to “10 Sunday Reads”

  1. chartist says:

    I have mentioned here more than once that my favorite stock is Ford Motor. It’s trading at 72% of it’s PEG ratio. Earnings just released were excellent and future estimates are being ratcheted up. Are there pockets of zaniness, sure, but there always are in bull markets. I’ve been watching an ascending triangle breakout on the monthly SPX chart that points to 1850 on the SPX….But I think there’s more than that coming. The Fed wants to rebuild confidence in the markets by eliminating volatility. I also hope it chokes the bonuses of NY trading houses as they can’t generate alpha.

  2. RW says:

    How the Budget Debate Could Help the Economy

    I remain truly and deeply disturbed by the immediate pivot from the debt-ceiling debacle and government shutdown to yet another set of budget negotiations, with not even a head fake toward dealing with the slogging economy.

    Still, is there any lemonade to be made out of this lemon of a budget conference that’s about to get under way? I think there is.

    The ability to make lemonade out of the congressional lemon depends on the Republicans abandoning their core legislative strategy.

    Republicans and the “Lofgren Corollary”

    A couple of years ago, a Republican committee staff director told me candidly (and proudly) what the method was to all this obstruction and disruption. Should Republicans succeed in obstructing the Senate from doing its job, it would further lower Congress’s generic favorability rating among the American people. By sabotaging the reputation of an institution of government, the party that is programmatically against government would come out the relative winner.

  3. chartist says:

    I wanted to comment on the consumer confidence graph. I have modified my purchasing behavior completely over the last five years. I only buy if it’s on sale. I buy gently used items on Ebay. My last two cars were a new Jaguar and a new Mercedes. Now, I am looking for a pre-owned car. And I don’t care if my 401K and my house soar in value, I need that money in 13 years when I retire not to support current spending. I value experiences more that having things. Plus, my kids are at the age where they are getting expensive with private school and braces.

  4. Bob is still unemployed   says:

    Looks like oatmeal for brunch as I browse a Secret NYC Art Gallery. (

  5. 4MYGRANDKIDS says:

    I read TBP pretty much daily and am constantly amazed at the scope of the contents. I even learn from
    the comments. I thank you.

  6. rd says:

    The FT article on equities and diversification is interesting but I wonder if they are missing a big part of the picture.

    They are focused on the performance of endowments and comparing them mainly to the S&P 500 as well as a 60/40 stock/bond mix. It is unclear if they are looking at total return or just capital gains and losses. However, endowments are like retirement funds during retirement. Their key purpose is to provide an ongoing source of reliable income that will increase with inflation or better over time. The actual magnitude of the asset base is correlated to the ability to produce income but is not the same thing, although it does make for good headlines.

    A much more useful measure of the performance of the endowments would be an analysis of how much income was spun off each year back to the institution and then how much residual increment of asset base growth there was and compare that to how the baseline scenarios would have played out. This is not the same thing as total return as total return assumes that income is re-invested which is particularly valuable during downturns when the interest and dividends are buying stocks at cheaper prices.

    It always seems to me that it is the little guy CFAs that are doing the actual analyses of sequence of returns, diversification, and reliable income generation potential. Rarely do I even see an article about it in the mainstream financial press or anything of value from the big financial institutions.

  7. rd says:

    Re: iPads

    Desktop/laptop computers now are on a 5+ year refresh cycle. You typically replace them now if something physically breaks or if the operating system is no longer supported and your machine doesn’t have the capability of running the new operating system.

    The tablets are now getting close to the point where they can do everthing somebody wants in a mobile device that doesn’t have to replace their main computer. Apple’s next move will have to be to enable their iPads to function as complete computer replacements where you go into the office, dock them, and work on the report or spreadsheet due to your boss later that day. Unfortunately, their closed architecture and high price in the past meant that only a small percentage of the desktop and laptop computers are Apple. Google is probably much better positioned to replace Windows based computers with Android and their various Google OS, office suites, and Chrome browser in the computer market.

    The next 10 years are going to be interesting in this market.

  8. zell says:

    Want to lose your brunch? Check out the N.Y. Times piece on the need to dramatically increase inflation. Frighten folk into spending that money, unleashing that pent up liquidity. alleviate the burden of debt. Huh? What about the bond markets? The Fed would have to put unlimited bids under it to keep control. Some big names are quoted. It sounds to me like the terminal liquidity concept is being floated. i would think that a year ago N.Y. would have learned about too much liquidity.
    What is going on with your Fama/Shiller article? No comments again? It’s foundational, primary, whatever. Does one buy the efficient market machine or hark back to Heraclitus’ Man is measure of all things?

  9. Francisco Bandres de Abarca says:

    This is no time to get off the equity train? Perhaps not–at least, not in total. But this may serve as a useful frame of reference:

    It is a chart of the Wilshire 5000 Total Market Index (a very broad market index), with the national GDP as a denominator. The ’1.0′ on the left-hand scale equals 100% of GDP to scale. Any time this chart indicates a level over 1, that means the Wilshire 5000 is valued more highly than the GDP. Granted, this state can continue for a while (2001, for instance), which means you can run gains and manically-increasing margin debt to the blow-off top. But it also means that likely long-term forward gain (~2%) is now lower than the current yield on a 10-year treasury (and that’s pathetic!).

    It is also worth keeping in mind that Draghi and Yellen are not opposed to negative interest rates, and I have no doubt that they have no fears of engaging in that experiment. And who could begrudge them that(?)–affable, harmless academics that they are.

    I find the madness of crowds is better appreciated as an observer, rather than participant.

  10. swag says:

    When information systems fail (Felix Salmon)

    A great short read, particularly for anyone who has done IT in the investment racket and knows how Rube Goldbergesque those systems and integrations have become. They’re only getting worse.

  11. Molesworth says:

    Never say never.
    Interesting list that ignores circumstances. A person born poor in a corrupt under-developed country can hardly be so cavalier. Many more circumstance less dire still require compromise in order to live without fear and hunger.
    After you’ve attained a certain level of comfort, stability and success, maybe then you can infer “never.”
    Better to use the word “avoid” rather than “never.”

  12. NoKidding says:

    Apple’s big iPad problem: How do you convince owners to upgrade when their old machines work just fine?

    Release software updates that hamstring old devices by disabling or slowing down favorite aps?