Tuesday, February 20, 2018

Partial List: Twin Peaks - Wax & Wane

Partial list of peaks...

Some I predict we are in (or recently passed):
  • Garage, driver, and long-haul truck driver
  • Oil, et al. price
  • Professional stock picker
  • Bank (traditional) - regulation and innovation are to "blame"
  • Farm (agricultural land use) - see here & here
  • Storage unit

And some I predict we are not:
  • Local truck driver and this
  • Oil, et al. quantity
  • Index investing (true, pure passive even without the growth of factor-based, which is active)
  • Bond price - relatively low rates as far as the eye can see
  • Reality TV
  • Zoning - the Complacent Class isn't done yet "protecting" us from new ideas and FOOL is all about
  • Authenticity - the desire for this is just building and its continued strength is evidenced by the concern so many have that it is going away.

Sunday, February 18, 2018

What's Ahead for Stocks - precise predictions

Seriously?!? You clicked thinking you'd find some nonsense about, say, money about to [do something in regards to] "the sidelines", or perhaps you wanted to know how many technical indicators were crossing arbitrary thresholds. Oh, maybe it was an insider's take on smart money that you sought. But what would make the traders behind it "smart", how would I know what "they" (in unison? all on the same side of each trade?) were doing, and if I did, why would I share it?

Markets recalibrate constantly to new information. They also recalibrate constantly to changes in the weighted-average risk appetite of market participants. Did something change over the past couple of weeks? Of course, there is always something changing. But what?...

John Cochrane offers a great post for that question. Short answer: nobody knows. It cannot be known.

But what if we're in a bubble? Yeah, about that... Scott Sumner has two recent posts on that topic and more. He suggests we not be so sure about labeling past prices bubbles and lower the status of pessimists (I agree). He also suggests we should not offer explanations for events for which we are ignorant (I agree).

The standard advice is still the best advice:

  • Set your asset allocation as appropriate for best achieving your goals and personal constraints.
  • Get broad (very broad) diversification . . . cheaply.*
  • Go for lunch.
  • Check from time to time (not minute to minute) readjusting if needed to more appropriately fit your current goals.


*There are LOTS of investment options out there. The links show just two--albeit, two very good ones for achieving broad, cheap diversification. Also, maybe this.

Highly Linkable - How Are *We* Doing?

This links post is comprised of several items I believe are linked together in theme or subject matter. See what you think...

First Don Boudreaux points to a great website and corresponding TED talk by Anna Rosling Rönnlund. The project is a photographic-based exploration of how people compare. The within-country and among-country comparisons highlight what wealth and poverty look like. Notice the similarities, notice the differences, and notice on what factors these things do and do not seem to correlate.

Steven Pinker makes a strong case that The Enlightenment Is Working--"Don’t listen to the gloom-sayers. The world has improved by every measure of human flourishing over the past two centuries, and the progress continues." Let's suppose you conducted a survey every year for the past two centuries asking people simply, "Are you better off today than last year?" My guess would be the average and very typical response would be hard to distinguish from 'basically no improvement'. YET, the improvement over that time span for all of humanity (not just the average but for EVERY cohort) is dramatic and undeniable (once you look at the evidence). Why might this paradoxical result occur?...

Part II of Russ Robert's The Numbers Game is an examination of economic progress which suggests answers to the prior question above. The subtle yet very dramatic, counter-intuitive lesson, Simpson's Paradox, is awesome. To be sure, Simpson's Paradox would not answer my hypothetical, but it relates to how we misperceive small but compounding change and growth. Also, don't miss the first installment of Russ's video series.

But wait, aren't there too many people (or soon will be) for all this good news to continue? Steven Landsburg explores this issue in this video. He starts where everyone should start but often does not by asking "How would we know?" I believe he makes a very strong case that the answer is 'NO' we don't have and will not have "too many" people.

Tyler Cowen pointed to a couple of posts by Katja Grace who ponders 'Why did everything take so long?' The first and second both cover how and why progress is so difficult.

Sunday, February 4, 2018

My 12 Rules for Life

Jordan Peterson started this. Many have been following. I like Tyler Cowen's, Megan McArdle's, and Arnold Kling's among others.

Here is my contribution to the cause:

  1. Try more things--reach out for more variety along all relevant dimensions.
  2. Quit more things.
  3. Read more (quantity, quality, and variety). 
  4. Practice ‘Hell Yeah!’ Or ‘No’.
  5. Listen with intention. 
  6. Smile more. 
  7. Choose honesty, demand the same, and respect when you get it. 
  8. Pursue what is being rewarded but always to the satisfaction of high ethical standards. 
  9. Trust your gut instincts. 
  10. Ask your spouse, children, immediate boss, and parents for permission. For everyone else, ask forgiveness. 
  11. Change your mind. Distance yourself from those who won’t. 
  12. Forgive and move on.