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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Prufrock Ponders Total Return

Prufrock Ponders Total Return (with earnest apologies to T.S. Eliot) And indeed there will be time To wonder, “Do I dare?” and, “Do I dare?” Time to turn back and descend the stair, With a bald spot in the middle of my hair— (They will say: “How his hair is growing thin!”) My morning coat, my collar mounting firmly to the chin, My necktie rich and modest, but asserted by a simple pin— (They will say: “But how his arms and legs are thin!”” Do I dare disturb the universe? In a minute there is time For decisions and revisions …

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Big is Beautiful interview: not what you might expect!

Small is beautiful, right? Isn’t that what we’ve all been taught? From Jeffersonian politics to the hallowed family farm, from craft breweries to tech start ups in the garage. Small business is the engine and the soul and the driver of the American system. That’s the dominant narrative. And according to Robert Atkinson and Michael Lind, it is really wrong. In their new book, Big is Beautiful: Debunking the Myth of Small Business (MIT Press, 2018), the authors review the empirical evidence and conclude that large businesses create more, generate more intellectual capital, pay better, pollute less, are more diverse, and score higher on pretty …

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New Books in Finance interview: The machines versus the humans…..

The machines have taken over…. For many operating in investment management, it can certainly seem that way: factor investing, algorithmic investing, dynamic hedging instruments, risk management derivatives driven by changes in market prices, etc. dominate much of the investment narrative. And now and again these supposedly superior investment approaches get blamed for causing big blow ups. If portfolio insurance led to a wave of computer selling in 1987, then the chaos generated by the models in 2008-2009 was incomparably larger. So say the critics. But in Financial Models and Society: Villains or Scapegoats (Elgar, 2018), Ekaterina Svetlova begs to differ. She looks at how …

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The key is private sector debt……

Richard Vague really really cares about private-sector debt. And he thinks you should too. In A Brief History of Doom: Two Hundred Years of Financial Crises(University of Pennsylvania Press, 2019), Vague sees the rise and fall of private sector debt as the key factor explaining the cycle of economic crises experienced by developed and major developing economies over the past two centuries. The early stages of a lending cycle look and feel good. Everyone is happy, the lenders think they are smart, the borrowers feel they have everything under control. Then the lenders and borrowers take it to another level, and then …

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New Books in Finance Podcast: Banking on Freedom

Think running an insurance company or a bank is hard?  Try doing it as an African-American woman in the Jim Crow South.  Shennette Garrett-Scott‘s new book, Banking on Freedom: Black Women in U.S. Finance Before the New Deal (Columbia University Press, 2019) tells the fascinating story of just such an endeavor, first the Independent Order of St. Luke, and then the St. Luke Penny Savings Bank, founded in Richmond in 1903.  Along the way, she tells the tale of force-of-nature strong women, particularly Maggie Lena Walker, who wouldn’t take no for an answer as she built up a culture of business and entrepreneurship …

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