If it looks like a bubble, walks like a bubble, & talks like a bubble, is it a bubble?

History matters, no less so for your retirement account. Are we in a normal investing environment or is something “not quite right”? The asset bubble doctors are in and will see you now.   Join me for a conversation with Will Quinn, co-author along with John Turner, of the new and highly acclaimed, Boom & Bust: A Global History of Financial Bubbles (2020). The NBN podcast can be accessed here.

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Uninvestable, due to government overreach…

I was alarmed yesterday to see a sitting US senator assume that the Fed Chairman would naturally prohibit banks from paying dividends (or buybacks) under the new administration. The Fed Chair wisely deflected the question and the assertion behind it.  For folks unaware of how the stock market works, and specifically bank accounting, let me say that that was a “doozy” moment. Yes, it is true that the vast majority of quantitative easing and Federal Reserve activity over the past 13 years (since the GFC) has gone into the financial markets rather than the real economy. That is not because …

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No, Virginia, a dividend and a harvested capital gain are not the same……..

12pm Feb 21, 2021 update: Got some thoughtful pushback from KPA on the assertion that selling shares can still be viewed as a business-owner action and contingent variable in the overall assertion. My answers: 1. Investors have the option of taking cash or reinvesting the dividend. There is a very modest cost to doing the latter, but there is a cost, so it drives academics nuts. You could say that the business owner who does not need the cash now is forced to take it and/or incur the minor hassle of dividend reinvest. 2. Clientele effects. People who want dividends …

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Do books and articles about financial bubbles mean we are in a bubble?

I’m reading an excellent new academic account of bubbles in the financial markets by two Irish academics, William Quinn and John Turner, Boom and Bust. Their taxonomy of bubbles involves formally identifying them after the fact, though they believe their explanatory model would help forecast as them as well. Still it raises the question, which we all felt in 1999 and some of us feel in 2021, how one identifies a bubble whilst you are in the midst of it. While I was pondering that notion, the latest from the WSJ‘s Streetwise columnist, James Mackintosh, hit my device, “If it …

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Nav@1ny is a master of modern media, but does it matter?

February 2, 2021 update: It’s not the crime, but the cover up… That’s what they said about Richard Nixon’s downfall. Other similar episodes abound.  Given events in Russia over the past two weeks, one might assert a new corollary:  It’s not the corruption, but the crackdown.  A new allegation of corruption, even one on an unprecedented scale, was unlikely to move Russia. But the government’s excessive response and its treatment of the man behind the video has led to a popular reaction that the video itself did not. When is a show of government force actually a sign of great …

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It’s time for a new Centrist party in the spirit and practice of classical liberalism.

The good news is that the Grifter has left the White House. His closest aides and high-profile abettors are scurrying away to avoid the infamy that they so richly deserve. The newly installed President is clearly a moderate fellow, empathetic and conciliatory. And, ironically, he is so old that he can have no other agenda than to fix the current situation. His Vice President is the embodiment of the American dream. While the country remains in severe national security peril during this period of transition, one of the worst political crises in our nation’s history appears to be behind us. …

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Price discovery, Soviet Russia, and artistry

The elevator pitch to a book editor and movie producer that never happened: “the early 1960s Soviet experiment of loosening price controls would make for a great work of historical fiction and a high-end movie drama.”  No one in their right mind, right? And yet, it did. Francis Spufford’s Red Plenty came out in 2010. It is simply the best Western work of historical fiction about the post-war Soviet period. Spufford is not a trained Soviet specialist, but every professional historian of the Soviet Union secretly (and not so secretly) wants to have written that book. I know of what …

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How different are financial and political “bubbles”? And what ends them?

Depending on your perspective on certain “excited”  areas of the market and “extremes” in the political spectrum, we are currently engaged in a real-time exercise regarding what catalysts bring an end to these phenomena. Are the catalysts to end those historical moments different? By day, I have to think about the former; by night, I ponder the latter. And we know the role that social media plays in both of these realms. It’s worth recalling that for one of the past extreme moments, the reign of terror led by Joseph McCarthy, the social media of the day played a key …

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