Category : Economic Thoughts

Mini Book Review and Thoughts | “Minding the Markets: An Emotional Finance View of Financial Stability” — David Tuckett

I will ignore the somewhat silly premise of the book which was to analyze the emotional nature of “money managers” and thus glean some clues as to how to prevent future financial crashes. But I would note the following: If this is what passes for money management in the UK, they have a terrible problem. The structure of money management firms and their relationship with clients is almost always an enemy to actually achieving client goals. Don’t check short term […]

Another Sign of These ‘Loose’ Times

We’ve witnessed many weird and fascinating things in these six years of zero interest rates and quantitative easing but nothing that we’ve seen has personified the looseness of monetary policy like what was uttered on RCI Hospitality’s second quarter call. By way of background, RCI Hospitality is an operator of “adult themed” clubs. Yes, those kinds of clubs. The CEO, answering a question from an analyst about the great rate they just received from a bank on the first ever […]

Things That Make Sense to Us…

…That Were Written By Other Guys

Buyback BS

Of the myriad of reasons proffered daily as to why we are the verge of stock market doom, a “decline in share repurchase” has come up a lot. We would note the following: As the below chart suggests, shares outstanding for most of the S&P 500 as a whole have not changed in a decade. Material share repurchase that actually reduces shares outstanding is not the majority rule. If it has been the prop for the market going up, it […]

Let’s Picket for Better Global Sewage

Politics aside, we are regularly asked by large institutional clients, “How is Climate Change affecting the way you invest?” Our short and practical answer is “It doesn’t.” This piece by longtime favorite economic and environmental thinker Bjorn Lomborg is a more detailed version of that answer. It also suggests some subtle moral ambiguity in what some would consider to be “conventional wisdom” on the topic. CLICK HERE to download PDF

Quarterly Earnings: Our Sentiments Exactly!

by Ben Claremon | Research Analyst As long term-focused investors, we have a certain disdain for the quarterly earnings rigmarole and the associated maniacal focus on “beating” what are somewhat irrelevant earnings per share estimates. The truth of the matter is that, more often than not, what happens during an arbitrary 90 day period has very little bearing on the long-term opportunity for a company or on its intrinsic value. As such, the huge price moves—both up and down—that occur […]

Very Scary

Our takeaway on this speech is three-fold: We paraphrase: “Wise regulation, which is mostly now in place globally, will ensure that future financial crises will not billow out of control.” Wow, I didn’t realize that until 2010 the world didn’t have any regulators—no wonder why we have had periodic problems. Mrs. Yellen seems oblivious to enormous distortive effects of her institution’s suppression of interest rates below “market.” A lot of people are counting on the Federal Reserve. We wouldn’t. CLICK […]

Buffett vs. Icahn on Coca Cola? Slam dunk for Icahn.

by Jeff Bronchick and Ben Claremon We have been thinking about this issue for a few weeks, tempering our urge to dash out some heated thoughts of the moment. We have gotten over it. Ignoring for a moment the details of Coca Cola’s magnificent excessiveness in its executive compensation plan, the issue here is Buffett’s decision-as Coke’s largest shareholder and long-term confidante of the management team-to express his viewpoint that the pay package is indeed excessive by abstaining from a […]


Here are some thoughts that didn’t make it into our January Strategy Letter but that I wanted to clean off the plate for the New Year: Becoming a celebrity investor as a result of being a serial presenter on the investment conference trail is clearly a cool thing for the investor. Whether the clients benefit commensurately from that point onward is an entirely different question.  Sub-text: there is no correlation between the length of a power-point presentation and the likelihood […]

The Nonsense Math Effect

Please insert the phrases “money manager,” “hedge fund,” “large pension plan,” and “underperformance” at will throughout this piece.  The Nonsense Math Effect  Mathematics is a fundamental tool of research. Although potentially applicable in every discipline, the amount of training in mathematics that students typically receive varies greatly between different disciplines. In those disciplines where most researchers do not master mathematics, the use of mathematics may be held in too much awe. To demonstrate this I conducted an online experiment with […]