- SNAP Caseload and Spending Declines Have Accelerated in Recent Years. CBPP. The recovery is real but no one seems to believe it. Times are pretty good!
- Biofuels Haven’t Cut Gasoline Prices Or Emissions. Oilprice.com. US – Iran conflict just took a huge step down the “unintentional war” path. Not good.
- US Accuses Iran of Oil Tanker Attacks. Rigzone.
- Brexit: UK firms ‘not even close to ready’ for no deal. BBC. My bet is that most firms would figure it out quickly when the time comes, but that’s a very low-confidence bet. Lots of risk here still.
Financial Articles I’m Reading This Week – 7 June 2019
Continuing a streak of going heavy on off-topic articles. But… DINOSAURS!!
- Make School Hard Again. Reason. HT Tyler Cowen.
- The Day the Dinosaurs Died. New Yorker. “It’s like finding the Holy Grail clutched in the bony fingers of Jimmy Hoffa, sitting on top of the Lost Ark.”
- Josh Brown: The power of compounding can help you double your money, again and again. CNBC & Ritholz Wealth Management.
- What a War With Iran Would Look Like. Foreign Affairs. “Even if neither side wants to fight, miscalculation, missed signals, and the logic of escalation could conspire to turn even a minor clash into a regional conflagration.” I’ll add an extra quote, not included in this article, from Eisenhower: “Preventive war was an invention of Hitler. Frankly, I would not even listen to anyone seriously that came and talked about such a thing.”
- Maybe Big Businesses Aren’t So Bad At Innovation. Futurity.org. “The idea that large firms can buy small firms to replace their own R&D is just disastrous. If we have to start rebuilding the R&D engine from scratch, it will be impossible,” Knott says. “The second is that large firms shouldn’t try to operate like small firms to become more productive—they already are more productive.”
Political News in 2018 That Mattered To Your Portfolio
Last week I wrote a bit about how many unethical financial advisers make extensive use of pressure sales tactics. Political news items are some of the best tools such advisers have in their kit. Political news has high emotional content for most individual investors, so it’s highly useful as a manipulation tool.
The standard model for a big-box financial adviser is to follow the following game plan:
- Call you up to tell you about Political News Item X from this week’s headlines
- Suggest a “hedging” or “downside protection” scheme to actively defend your portfolio against this news item
- Execute a set of trades (and receive commissions on those trades) to implement this strategy
- Repeat again next quarter with a new random news item that sounds scary
Financial Articles I’m Reading This Week – 31 May 2019
Mostly off-topic stuff this week. Some great articles here though!
- A shocking share of the public thinks randomized trials are immoral. Vox. Very surprising– especially the fact that science education doesn’t appear to change this belief.
- Is the U.S. budget deficit sustainable? MacroMania. Don’t be put off by the mathy parts. You can skip them and get the gist. Here’s a good summary: “What does this mean for fiscal policy going forward? The main conclusion is that the present rate of deficit spending and high level of debt-to-GDP is not something to be alarmed about (especially with inflation running below 2%). The national debt can, will, and probably should continue to grow indefinitely along with the economy. What matters more is how expenditures are directed and how taxes are collected. Of course, this should be done with an eye to keeping long-term inflation in check.”
- The Mueller Report. U.S. Dept. of Justice. For the past few weeks I’ve heard a lot of people arguing about the contents of this report but very few people have taken a peek themselves. There are two volumes. The first covers Russian efforts to interfere in the 2016 election in order to benefit the Trump campaign and hinder the Clinton campaign. The second volume covers President Trump’s efforts to hinder the FBI/DOJ investigation of these Russian efforts. Each volume has a six to seven page executive summary. The summaries are extremely readable– no legalese. Read the summaries yourself and don’t be at the mercy of the pundits for your knowledge. Seriously, thirteen pages.
- How I Would Have Fared on the SAT’s Adversity Score. New Yorker. Controversial subject– I don’t have a comment, I just really liked the article.
Financial Articles I’m Reading This Week – 24 May 2019
Here are a few financial and economic articles that I found interesting this week. Lots of good stuff to read about the US – China trade dispute.
- John H. Cochrane reacts to Jeff Clemens discussing minimum wage economics. I find this subject interesting but don’t have a strong opinion for or against minimum wage hikes.
- Demystifying Belt and Road at Foreign Affairs.
- The Economy Is Strong. So Why Do So Many Americans Still Feel at Risk? NY Times. This is a big mystery to me.
- Google reportedly ends business with Huawei, will cut it off from Play Store. Ars Technica.
- A Political Economist on How China Sees Trump’s Trade War. New Yorker.
Cognitive Bias Series: Confirmation Bias
This is Part 1 of a series of posts about various cognitive errors that lead to poor investment decisions. Part 1 deals with confirmation bias.
I know that most men—not only those considered clever, but even those who are very clever, and capable of understanding most difficult scientific, mathematical, or philosophic problems—can very seldom discern even the simplest and most obvious truth if it be such as to oblige them to admit the falsity of conclusions they have formed, perhaps with much difficulty—conclusions of which they are proud, which they have taught to others, and on which they have built their lives.
Tolstoy, What is Art, 1897
The average investor isn’t very good at it
The modern middle class investor beginning their retirement savings has full access to the same investments as the wealthiest and most sophisticated investors. Index funds and ETFs provide a cheap way to invest in the vast majority of global liquid assets. This has made the playing field for investing mostly flat, for the first time in history!
Despite this historically flat playing field, most investors don’t come anywhere close to a “market return”. Blackrock has compiled some data from 1997-2016 showing annual individual asset returns compared to the average investor:
Financial Articles I’m Reading This Week – 17 May 2019
Here are a few financial articles that I found interesting this week. Let me know if I missed some!
- Is it True that 40% of Americans Can’t Handle a $400 Emergency Expense?: CATO Institute. Short answer: Nope.
- Amazon wants to pay the New York Times and BuzzFeed to expand so it can reach more shoppers outside the US: Vox.com.
- An Interview With A Man Who Eats Leftover Food From Strangers’ Plates In Restaurants: Not financial or economic but very funny. Hat tip Tyler Cowen.
- Trump Delays Auto Tariffs in Press for Deal With Japan, Europe: NY Times.
Stock Buybacks Aren’t Evil
I have read several articles over the past year that include some harsh criticism of corporate stock buybacks. Most include a version of the argument: “President Trump’s tax cuts went primarily to wealthy Americans and corporations. Corporations squandered this windfall with stock buybacks to pump up their own stock price.” This sentiment is a little off-the-mark, but I understand the impulse. So I wanted to take a minute to work out the details on why stock buybacks are not so bad.
Continue reading “Stock Buybacks Aren’t Evil”401k Selection: Focus on These Two Things
401k investments are often the entry point for young investors into the market. There are a lot of factors that can and should influence an investor’s strategy for 401k selection, but the two most important decisions are:
- Should I invest in a Roth 401k or a Traditional 401k?
- What types of assets should I pick within it?

This article was originally published May 4, 2019 and was updated on September 5, 2022.
Continue reading “401k Selection: Focus on These Two Things”Cowen has Misled Us On AOC’s Marginal Tax Rate Idea
Tyler Cowen is my favorite blogger. He is completely unique, brilliant, and infinitely curious. But he just wrote a really bad article for Bloomberg on how The Democrats’ Latest Idea on Taxes Will Only Help Trump. He is responding to the comments by Alexandra Ocasio-Cortez during a recent 60 Minutes interview where she expressed support for additional tax brackets on the high end of the income distribution and a significantly higher top marginal tax rate for those highest brackets.
Continue reading “Cowen has Misled Us On AOC’s Marginal Tax Rate Idea”