Good morning. Here’s my Friday on-the-damned-Acela-to-D.C. reading:

• Barron’s Roundtable: 2013 Performance & Updated 2002-13 Rankings (PunditTracker), see also The Most Expensive “Free” Advice — 2014 Update (A Dash of Insight)
• What if the Future Is Better Than We Think? (A Wealth of Common Sense)
• Wells Fargo’s pressure-cooker sales culture comes at a cost (LA Times), see also Wall Street Predicts $50 Billion Bill to Settle U.S. Mortgage Suits (DealBook)


Continues here

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.

15 Responses to “10 Friday AM Reads”

  1. Concerned Neighbour says:

    Headline writers are just embarrassing themselves at this point trying to explain the resiliency of this “market”.

    U.S. Stocks Rise as Jobs Data Fuels Optimism on Stimulus

    So let me get this straight. When the Fed tapered, it was hugely bullish news because it meant the economy was doing better. When there is bad economic news, it too is hugely bullish news because it means the Fed will stop the taper.

    I’ve been seeing headlines with this kind of rationale for almost half a decade now. I’m surprised I have anything left with which to vomit.

    • VennData says:


      Unless you’re hawking papers don’t worry about “the headlines.” Forever “positive” pone there are negatives about the taper and/or jobs sending us into the unrecoverable ditch. Ignore it.

      Set an asset allocation, Some stocks, some small cap value, some foreign, some bonds, some Real Estate. Use indexes only. Re-balance it one a year and that’s it.

    • Concerned Neighbour says:

      VD, this has nothing to do with my investment portfolio. I am well versed in asset allocation/rebalancing.

      It has everything to do with doublespeak/propaganda. What we have witnessed for approaching half a decade is the equivalent of saying up is up, and down is up. It disgusts me, as it should disgust every thinking person. I can and will criticize the media for not telling it like it is: these “markets” are nothing but a central bank price setting mechanism. Free markets/price discovery are long dead and buried. Every time a piece of financial journalism uses the label “free market”, it is a lie.

  2. Alex says:

    All this advice on “emerging markets” is a bit of a mess. As I recall, the GS advice versus the Skagen perspective appear to be in contradiction, but they are talking about different regions, countries, and even asset classes. What is wrong with these people, did they fail geography as children? I know that more complex and definitions of what we are talking about do not fit in headlines, but they should be considered in analysis. China is not looking fantastic. Fine. Does that mean the entire asia region is a wash, or that Africa is a bad idea? No… it does not. Brazil is having some obvious problems. Does that mean the Gulf region is in trouble? Of course not. Oh, and so “emerging market” (growing to hate that term) bonds are facing some stiff competition from U.S. treasuries. So growth stocks are a bad idea? Why? All of this so-called advice on the subject smells of being dumbed down for some retail investor who literally does not know the difference between Vietnam and Venezuela.

    • rd says:

      you don’t need geography lessons. All you need to know is that your EM fund didn’t do well and so you should sell it to Goldman Sachs when they ask you to.

  3. hue says:

    T-Mobile ‘Sticks It’ to Competition, Will Cover Early Termination Fees (Entrepreneur.)

    The Open-Office Trap (New Yorker)

    First as Fake, Then As Reality: Niagara Froze (The Atlantic) Are You an Ass Man? This Heiny Has 1.5 Million Followers (Buzzfeed)

  4. Robert M says:

    On an ongoing basis hats off to BR for introducing Farnam Street Blog to his readers.

  5. rd says:

    This has been both amusing but is also a strong indictment about how US politicans view government requirements and processes:

    The process is outlined clearly on the Canadian government’s website:

    Apparently Ted Cruz, a Harvard trained lawyer, is not capable of going through a simple application form, attaching a check, and mailing it in. Instead he needs a team of lawyers to do this on his behalf. The reason that there is a process with an interview is two-fold: make sure there are no back taxes owed; and make sure that the person is not being coerced by a foreign government into revoking his citizenship.

    He left Canada as a little child so that he is unlikely to owe back-taxes despite Canada being a Communist country (they have universal healthcare paid through taxes) for the first point. He may have difficulties proving the second point which is why he may need the lawyers. Opponents to renouncing his Canadian citizenship may sue claiming that he is being coerced by the birthers and Donald Trump (who has relatives in Canada). However, there are no trick questions or nefarious motives in the application process, unlike the numerous US states’ voter ID laws.

    Plus, five good reasons why Cruz should remain a Canadian

  6. willid3 says:

    what could go wrong with out sourcing? after all if you let those who are being policed, they would always tell you the truth right?

  7. VennData says:

    Bitcoin is just a free currency, free from control of Benanke, Obama, Reid, Yellen, and Pelosi. So just buy some.

    However, you might want to make sure you understand this first.


  8. VennData says:

    Uh oh. First seven trading days and the S&P is up. We all know what that means.;range=ytd

    You go ahead, just hand onto those bonds and gold. You will do fine, again.

  9. RW says:

    It will be interesting to see how much longer the apparent disconnect between corporate profits and consumer woes (AKA slack demand) can continue. For sure it has gone on a helluva lot longer than I even dreamed possible but other than corporate seizure of all productivity gains and ongoing government corporate subsidies I am at a loss to explain it.

    Yet Another in the 56-Month Straight Series of Disappointing and Awful Bureau of Labor Statistics Household Employment Surveys

    From April 2008 to October 2009, the household employment survey results were disappointing and awful as the chronicled the collapse of employment in America. And since November 2009, the household employment survey results have been disappointing and awful as they have chronicled the flat-lining of the employment-to-population ratio: no greater a proportion of Americans have jobs now than had them in October 2009.

    • Concerned Neighbour says:

      RW, this is what happens when all government and monetary policy is focused on making large corporations and wealthy individuals wealthier. In the past, there was more balance. For example, when profit margins got historically high as they are now, new entrants would force those margins down. Now everything is rigged for the big guys. If you happen to be one of the very few entrants to gain a bit of market share, you are invariably bought up by one of the established players before you can do to much damage to the status quo.

  10. rd says:

    Good news. Science has proven that men are still necessary, despite what our wives tell us:

  11. Poter says:

    All this confusing talk of bubbles of late, and now from Master Greenspan. Please permit me to attempt a definition of a bubble:
    To understand a market bubble one needs to understand the engineering concept of stability, since bubbles are unstable. Take the example of a microphone-amplifier-speaker system used in conferences. The system output is a function of the voice input. But at times the system produces a screech, marking its transition into instability. Why does it go unstable? It sometimes happens when the loudspeaker output is picked up by the microphone input, amplified and returned to the speaker, creating a vicious loop.
    What are the conditions for instability? In the example, there is a feedback loop. The loop is of such a nature that there is amplification around the loop. This is called positive feedback. (Negative feedback would act to reduce the screech, as a noise-cancelling headphone would.) Technically, the positive feedback has a gain greater than one. The pitch of the screech is a function of system characteristics that give it a “characteristic frequency”, i.e. the frequency at which the gain is greater than one. (To stop the screech, turn down the volume control or move the microphone away from the speaker or its maximum intensity beam – reducing the gain.)
    In a stable public address system, the output depends on exogenous input – the voice. In the unstable case the output behaviour becomes endogenous to the system.
    Market behaviour is anticipatory. Aggregate buying or selling based on this anticipation affects the market (feedback). Anticipatory action creates positive feedback. Positive feedback in conjunction with other sub-system characteristics accounts for behaviour such as drops undershooting, peaks overshooting, and reversion to the mean overcorrecting. Under some conditions the market becomes unstable. When it does its outputs change (grow) endogenously, i.e. the external world can be frozen in time, and its output would still grow. (A crash is a negative bubble, but people don’t view it that way.)
    What causes a bubble to burst? In a physical system, usually it limits in a non-linearity. In a market system the following may occur:
    * Some event changes the sub-system characteristics, and/or
    * The market system is an aggregate of actors. An increasing proportion of actors start to anticipate a reversal of direction and their consequent actions end up causing it. (They anticipate a reversal since they judge that the price has become unrealistic, and they judge that enough other participants will imminently agree.)
    So what is a bubble?
    A bubble is the observed action of a sub-system with enough anticipatory feedback gain to cause it to be unstable, i.e. for its outputs to change endogenously.
    Is QE creating a stock market bubble? Not by this definition. The price level seems tied to the cumulative amount of QE exogenously.