Is this week over already? How’d that happen? Don’t worry, our amuse-bouche of morning reads will ease you into the weekend: (continues here):

• Investors Pour Into Vanguard, Eschewing Stock Pickers (WSJ) see also Just 35% of funds with 10-year track records beat the S&P 500 index on a 10-year annualized basis (AAII)
• Hedge Funds and the problem of structure (FT Alphaville)
• Hawks Crying Wolf: Ignore those who have been warning about soaring inflation nonstop for six years (NYT) see also Interest-Rate Fears Trample Gold (WSJ)
• The dark side of technical analysis (Adam Grimes)

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.

13 Responses to “10 Friday AM Reads”

  1. VennData says:

    US debt issuance to surpass record, currently over $1T.

    http://online.wsj.com/articles/u-s-bond-issuance-nears-1-trillion-1408651952

    Yeah that’s bearish. All that corporate credit creation is sure to ignite tragedy and global woefulness.

    I bet they burn the money over a cracker barrel complaining all the while of end of days and proclaiming allegiance to ISIS.

  2. rd says:

    The comparisons to the S&P 500 come out in force near the peak of bull markets. 10-year annualized returns now start at the bottom of the dot.com US bear market, so any all-stock US stock index will crush almost anything else. Vanguard’s Total Stock Market does even better than the S&P 500 since it incorporates small stocks as well.

    Interestingly, balanced index funds and the Vanguard LifeStrategy Growth fund that holds US stocks, international stocks, and some bonds did almost as well over the same period which is quite a feat considering it tends to be significantly less volatile.

  3. hue says:

    Ferguson and the Modern Debtor’s Prison (Marginal Revolution) The Ghost of Ronnie Rage (Esquire)

    Citigroup Earning Less From Tokyo Than CEO Salary (Bloomberg)

    I am not emotionally prepared for Twitter to suck (The Verge) when will the crying stop, when the next thing comes along, the next thing will come along.

  4. constantnormal says:

    I think it’s kinda funny that the post opens with a flourish of trumpets for lemmings flooding into index funds, and ends with a chart of the Norwegian Sovereign Wealth Fund, Norway’s answer to our Social Security Trust … a VERY large actively managed fund … so yeah the inflows and outflows of a pension fund are different from the inflows and outflows of the S&P 500 (which closed on August 21, 1998 at 1081.24 — compare that to the rise of the Norwegian Fund shown in the chart), but it also ought to draw into question the infallibility of index funds, along with the statistically significant 35% of funds that beat the S&P over a decade, as well as Berkshire Hathaway, and several of the top hedge funds.

    Can EVERYBODY beat the averages? Obviously no, that would require messing with the definition of “average”. But it gets a lot easier to do so when nobody else is trying.

    Sometimes a contrarian approach makes sense.

    • rd says:

      A lot of money going into Vanguard is going into various asset allocation funds or using Vanguard funds within asset allocation strategies. So there is a lot of “active” management occurring in selecting the asset allocation and then rebalancing. Vanguard also has active funds, but they are generally well below industry norms for expenses and are usually run to be tax efficient. As a result, most of the time, Vanguard investors operate very differently than just buy and hold of the S&P 500 index.

  5. Robert M says:

    One thing that is not cited enough is tow things and both have to do w/ the role of government. government at all levels has bought into the austerity scenario. At the state and local level it effects wages threw freezes that have taken place since 2009 and in many places have not been lifted. The second is the tax cuts which take away money from infrastruture projects which ususally come w/
    Federal government aid. These infrastructure projects come w/ a law that mandates that wages be lifted to union levels.
    At the Federal level the austerity pathology has taken hold and there are wage freezes as well. Unlike state and local governments which are often bound by pre2009 laws that control borrowing there is no restriction on the Federal government. We have seen how miserly the American Taliban has been in regard to borrowing but even they haven’t failed to provide money to ongoing projects such as road construction in an election year. At long term borrowing at 3.18%(30) yrs these policies are not only miserly but sap the long term growth of the economy.
    The best answer to this problem is to see not if Fed Pres Yellen talks about ending QE amd raising rates but whether or not she has the gonads to go where no FED PRES has gone and talk about the failure of Congress to address the fiscal side of government policy.
    http://www.nytimes.com/2014/08/21/upshot/why-the-middle-class-isnt-buying-talk-about-economic-good-times.html?rref=upshot

  6. rd says:

    Interesting crime and fine statistics from Ferguson. Stopping people and then fining them is a major revenue source.

    http://www.thedailybeast.com/articles/2014/08/22/ferguson-s-shameful-legal-shakedown-three-warrants-a-year-per-household.html

  7. Robert M says:

    FED Pres Yellens transcript left much to be desired. The inability of the FED to recognize that lack of fiscal spending by government on all levels has lead to fewer jobs is troubling. The impact of these jobs on the long term growth of the economy, especially in the areas of education and infrastructure has to be of concern in that their loss holds the economic growth down. Further to see the dispartity in job growth beign caused by ” “pent-up wage deflation.” “; the idea that wages didn;t go down fast enough during the Great Recession is mind boogling. The only peoples wages didn’;t go down were those guaranteed to the bankster industry under the welfare provisions of the TARP program.
    I do not see how growth in wages, outside of certain sectors of the private economy, can grow without the fiscal impact of government jobs comes back.
    http://federalreserve.gov/newsevents/speech/yellen20140822a.htm

    • Robert M says:

      Something else that Yellen can not control but it hugely responsible for galling wages: at will work rules. As espoused by corporations and upheld by the Supreme Court of Texas wages will never go up. dupont’s behavior is the most egregious case of abusing workers since Enron gave you your 401K in enron stock only and not letting you sell any Enron stock if it was in your 401k, even if you bought it w/ the money you contributed.

      “The employees were worried that if DuPont sold the new subsidiary it would hurt both their pay and retirement funds. To convince them to work in the subsidiary instead of transferring within the company, DuPont assured its employees that it had absolutely no plans to sell the spin-off. Based on this promise almost everyone moved to the subsidiary, which a few weeks later DuPont sold to Koch Industries. Koch cut both salaries and retirement packages. DuPont had, as it turns out, been negotiating this deal the entire time”

      http://business-news.thestreet.com/philly/story/employers-can-legally-lie-workers-court-rules-0/1

      I honestly do not understand why White people aren’t rioting.

  8. VennData says:

    Ricketts puts Cubs staff on part time to avoid health care costs.

    http://www.suntimes.com/sports/baseball/cubs/29402267-573/cubs-cut-grounds-crews-hours-to-avoid-paying-health-benefits-sources.html

    I see the makings of new curse. The Right-Wing Rickett’s Curse.

    You wonder why people don’t go to Cubs games?

    http://online.wsj.com/articles/why-wrigley-field-is-suddenly-so-empty-1408578101

    Ricketts, that’s why.

    • Blue Guy Red State says:

      Ricketts is also trying to buy the governorship of the state of Nebraska this November, since he wasn’t able to buy himself a Senate seat here in 2006, getting beat like a drum by the most conservative Democrat alive, Sen. Ben Nelson (http://en.wikipedia.org/wiki/Ben_Nelson).

      He helped buy Nelson’s replacement, Sen. Deb Fischer – a Sandhills rancher of some means (http://en.wikipedia.org/wiki/Deb_Fischer) – with substantial PAC money in 2012, and now wants to be our governor.

      Since a Ricketts administration is likely to resemble Sam Brownback’s destruction of Kansas, this Nebraskan is hoping Chuck Hassebrook – a former UNL Regent (the only Democratic one in decades) and director of the Center for Rural Affairs for 36 years – can out-campaign Ricketts, his piles of GOP cash and AFP attack ads and spare Nebraska the Cubification that Pete would visit upon us. GOTV, Huskers, and send Pete packin’!

  9. Jojo says:

    A Recovery in Need of a Recovery
    Why the Middle Class Isn’t Buying Talk About Economic Good Times

    AUG. 20, 2014

    For five years, the United States economy has been expanding at a steady clip, the stock market soaring, the headlines filled with talk of recovery. Yet public opinion polling shows most Americans still think the economy is pretty miserable.

    What might account for the paradox? New data from a research firm offers a simple, frustrating answer: Middle-class American families’ income is lower now, when adjusted for inflation, than when the recovery began half a decade ago.

    Sentier Research, a firm led by former census officials, used census data to tabulate an estimate of the median household income — how much is earned by families at the exact middle of the nation’s income distribution. In June 2014, it found in a report issued Wednesday, the median household income was $53,891, down from $55,589 in inflation-adjusted dollars when the economic expansion began in June 2009.

    http://www.nytimes.com/2014/08/21/upshot/why-the-middle-class-isnt-buying-talk-about-economic-good-times.html

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