New York Times column on dividend investing.

A recent column by Jeff Sommer in The New York Times (https://www.nytimes.com/2020/04/24/business/coronavirus-stocks-investing-dividends.html) highlights some of the challenges faced today by investors seeking income from their stock holdings. While the economic shutdown has certainly created an adverse environment for the public-company cashflows that have historically been paid out in dividends, income-seeking investors will want to consider a few additional perspectives beyond what is raised in the Times. First, Sommer implies that because stock ownership has shifted from individuals a century or half century ago, to mutual funds, pension portfolios, and other institutional accounts now, that dividends are somehow less felt on …

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At the intersection of History and Finance…..

Think that Wall Street has nothing to do with the real economy? You are probably not alone in that regard. But it turns out, you are wrong. As William N. Goetzmann demonstrates in his Money Changes Everything: How Finance Made Civilization Possible (Princeton University Press, 2016), the tools of finance were as important for the rise of civilization as were the soldiers, castles and battles. Were it not for property contracts, agreements over imports and exports of grain, how to manage risk in increasingly complex economic ventures, etc we are still living in small agricultural communities eaking out an existence, …

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Not rational, not irrational, but “for itself” behavior.

Tired of the mechanical, narrowly rational human behavior of the Chicago school, but not exactly comforted by the emphasis on irrational activity in behavioral economics? So am I. Richard Robb, professor at Columbia and fund manager, offers a third way. In Willful: How We Choose What We Do (Yale University Press, 2019), Robb develops the notion of “for itself” behavior and decision making that can’t be reduced to the algorithms of calculating machines, or even those that are adjusted for human foibles. Willful is not a comprehensive theory of decision making, but an effort to reinsert some element of humanity into explanations of …

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The impact of the Chicago model: NBN Interview with Binya Appelbaum

Think economics is the “dismal science” with abstract formulas that have no impact on life as it is actually lived? Think again.  In The Economists’ Hour: False Prophets, Free Markets, and the Fracture of Society (Little Brown, 2019), Binyamin Appelbaum–former correspondent and now an editorial board member of the New York Times–brings to life how academic economists rose “from the basement” of banks and universities in the post-war period to have a direct impact on almost every aspect of our lives. The end of the draft, unemployment levels, inflation, deregulation, air transport, phone service, patent law, monopolies and anti-trust activity, …

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NBN “interview”: Robert Shiller’s Narrative Economics

Culture matters. And a key element of culture is storytelling. These maxims can be accepted as given, except in modern economics, where the mechanistic framework of modern macroeconomic analysis allows just for formulas. Concerned about the relationship between unemployment levels and inflation? Here’s the formula:  gW = gWT – f(U − U*) + λ·gPex    It’s called the Phillips Curve. Your personal experience of unemployment or rising costs, the stories that you tell others or hear from them–about globalization, about jobs being exported, about “disintermediation” through technology, etc–these stories play no role in the economics taught in the classroom, but may have a significant impact on the decisions that …

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How’s your portfolio doing? Do you really know?

In a prior post, I questioned whether relying exclusively on Total Return—the industry standard of measuring the results from publicly traded financial assets—was actually a good idea. Setting that heretical idea aside for a moment, it’s worth taking an additional step back to make sure that investors understand how they are counting, regardless of what they are counting. Specifically, in a world dominated by stock price charts, investors need to be reminded that price changes and total return are two separate things, and in the case of dividend-oriented stocks or portfolios, they can be very separate. So let’s review the …

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The Economics in Two Lessons NBN inteview

Trying to follow the key macroeconomic debates that are swirling around DC, CNBC, the WSJ and the NYT? If you are but don’t want to go back to graduate school or re-open your college macroeconomics textbook, John Quiggin has a solution. His Economics in Two Lessons: Why Markets Work So Well, and Why They Can Fail So Badly (Princeton University Press, 2019) achieves several goals. First, it frames the current debates, providing a concise, well-written history of macroeconomics and the key twists and turns in economic policy that have brought us to our current state of (general) disagreement on economic policy. Second, he structures …

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