and Investing
It is time to admit it: the investment advice I gave in my book Investing in the New Normal (2010) is entirely outdated. Even worse, it is ineffectual. Not that putting your money into investment funds – the main focus of the investment advice there given – is guaranteed to lose you money. It’s just … Continue reading “Understanding Corporate Bonds: A Reliable Investment Option”
The lesson of GameStop brought home
The cornerstone of John Maynard Keynes’ General Theory of Employment, Interest and Money is the rejection of one of the pillars of classical economics, and indeed of virtue itself classically understood. That pillar is saving. In that classical world, saving is a fundamentally important action, crucial to economic survival and growth. From it flows the … Continue reading “The Paradox of Unthrift”
When Schumpeter writes, “Now to the question: what is a savings account?”,[1] he is not being facetious. There is more to savings than meets the eye. Of course, the bare fact of saving is simple enough to understand. Rather than spend all of our earnings, we take some and put it to one side. What … Continue reading “The Problem of Saving”
In a previous post (“Quantitative Easing and Substitutionary Atonement”), I discussed some of the underlying philosophy of quantitative easing, the latest of the Fed’s attempts to “stimulate” the economy. Quantitative easing, to recap, is the term for central bank purchases of assets on the open market. The difference with traditional “open-market operations” is twofold. Firstly, the purpose: … Continue reading “Another Look at Quantitative Easing”
As is the case with the vast majority of commentators on this topic, I have not read Thomas Piketty’s book (Capital in the Twenty-First Century). The following is therefore gleaned from other sources, mainly this interview, from which, unless otherwise indicated, the following quotations are taken. The first thing to say is that, on the … Continue reading “Thoughts on the Piketty Thesis”
In attempting to explain to my wife why investing in the stock market right now is not such a good idea, I came up with a little graph, which at one glance reveals the matter succinctly. Here it is: It shows that the stock market growth of recent years has less to do with … Continue reading “Quantitative Easing and Substitutionary Atonement”