Apr 12, 2017

John Bogle on mentoring

Mentoring, in my mind, is less about helping someone fill out a checklist of accomplishments, and much more about passing along the immeasurable qualities one needs to be successful in their field --character, professionalism, honesty, intellectual curiosity, even humor. If you possess sufficient amounts of those characteristics, you're likely to be successful in whatever field you work in.

~ John Bogle

Ernest Hemingway on bankruptcy

"How did you go bankrupt?” Bill asked. "Two ways,” Mike said. “Gradually and then suddenly.”

~ Ernest Hemingway, The Sun Also Rises

Apr 11, 2017

John Bogle sees investment management as a zero sum game

In the debate about the fiduciary rule, one basic fact has been largely ignored. Investment wealth is created by our public corporations and reflected in stock prices. Stock market returns are then allocated between the financial industry (Wall Street) and shareholders (Main Street). So when the consulting firm A.T. Kearney projected that the fiduciary rule would result in as much as $20 billion in lost revenue for the industry by 2020, it meant that net investment returns for investors would increase by $20 billion.

By any definition, that’s a social good.

~ John Bogle, "Putting Clients Second," The New York Times, February 9, 2017

Kevin Duffy on the Fiduciary Rule

If we’re going to pass a law against conflicts of interest, shouldn’t there be a law against lobbying the government when such a conflict exists?  (Which is always, of course.)  How can John Bogle not admit that he and his friends benefit from the Fiduciary Rule?

The irony, of course, is that indexation needs discovery agents, and this legislation will put more obstacles in their path.  Without price discovery (e.g., interest rates set by the market) and discovery agents (active investors, short sellers, upstart entrepreneurs), there is no vibrant economy that generates the returns Mr. Bogle’s customers covet.

It can’t be a coincidence that the government only recently discovered the merits of high-liquidity low-fee investing after a tripling of the S&P 500 in 8 years and a 35 year bull market in bonds.  Should we be thanking them for ringing the bell yet again?

~ Kevin Duffy, April 11, 2017

The Economist magazine on regulation

The collateral and permanent effects on legislation... are so very complicated, and very often much more important than the direct and temporary effects, that to make good laws seems a work fit rather for God than man.

~ The Economist, 1846

Apr 8, 2017

Lysander Spooner on the Constitution

But whether the Constitution really be one thing, or another, this much is certain — that it has either authorized such a government as we have had, or has been powerless to prevent it. In either case, it is unfit to exist.

 ~ Lysander Spooner

Apr 5, 2017

Jim Grant on how markets do not always look ahead

Markets that supposedly and rightly ought to be looking ahead, sometime look back.

~ James Grant, Grant's podcast, January 27, 2017

(Grant was describing the spring of 1984 when U.S. T-bonds yielded 14% briefly in May while year-over-year CPI was 4% or less.  In other words, real yields were an astounding 10%.)

Jim Grant on the sovereign debt bubble

We live in a time of actual novelty.  Negatively yield sovereign debt is one such novelty and it is a doozy.

~ James Grant, Grant's podcast, January 27, 2017

Apr 4, 2017

Jim Grant on investing where the outlook is awful

There's a saying that a rally from awful to bad is much more lucrative for investors than from good to great.

~ James Grant, interview with Steve Forbes, June 4, 2014, 23:30 mark

(Grant was making the bull case for India.)

Joe Robillard on successful investing

Successful investing is about having everyone agree with you... later.

~ Joseph C. Robillard, Hhr Asset Management LLC

(Jim Grant quoted his friend, Joe Robillard, in this interview with Steve Forbes, at the 21:45 mark.)

Jim Grant on the definition of macroeconomics

My contention is that macroeconomics especially is politics dressed up in algebra.

~ James Grant, interview with Steve Forbes, June 4, 2014

Mar 29, 2017

Irving Fisher endorses presidential candidate Herbert Hoover (1928)

Mr. Hoover is a practical economist and one to whom is due more largely than to any other one man improvement in our prosperity...  Mr. Hoover knows as few men do the terrible evils of inflation and deflation, and the need of avoiding both if business and agriculture are to be stabilized.

~ Irving Fisher, July 29, 1928

Mar 26, 2017

Daniel Kahneman on the spreading falsehoods

A reliable way to make people believe in falsehoods is frequent repetition, because familiarity is not easily distinguished from truth.  Authoritarian institutions and marketers have always known this fact.

~ Daniel Kahneman

Mar 22, 2017

Doug Pollitt on the U.S. government bond market

If you are a creditor, the last person you want to see on the other side of the table is Donald Trump.

~ Doug Pollitt, "And the dull pangs of regret...," Pollitt & Co. Research, November 16, 2016

Mar 17, 2017

Kevin Duffy on how Milton Friedman was guilty of data mining when studying the Great Depression

Milton Friedman studied the Great Depression and noticed that money supply dropped by one-third from 1929-1933.  He came to the conclusion that this was the cause of the depression and that the Fed hadn't acted strongly enough.  He also influenced a guy by the name of Ben Bernanke who, at Friedman’s 90th birthday party, vowed not to make the same “mistake.” 

Did the Fed really sit bit idly as Friedman claimed?  Actually, no.  The Fed acted aggressively, buying government securities and expanding its balance sheet from 1929-1933.  It also lowered the discount rate from 5% to 1 ½%.  Friedman appears to be guilty of data mining.  Correlation doesn’t prove causation.  In fact, gold flows and loss of confidence in banks were contributing factors to the contraction in money supply.  If anything, the monetary inflation of the Fed probably made matters worse.

~ Kevin Duffy, "Mr. Market Flunks the Marshmallow Test," Grant's Spring Conference, March 15, 2017

Mar 12, 2017

Kevin Duffy on the elitist bubble

The financial elites think the masses are ignorant rubes who show up late for every asset party.  Yet it is the elites who are most economically ignorant -- the ultimate bag holders this cycle.

~ Kevin Duffy

Mar 9, 2017

~ Joseph Sobran on the two economies

As I see it now, there are really two economies — two distinct systems of producing and exchanging wealth.  Or rather, two systems that purport to do these things, though only one of them really produces anything, and the other is organized by a peculiar form of exchange.

The first is what is called the trade economy — the one summed up in the phrase "the free market."  The other might be called "the tax economy."

The trade economy is so familiar there is no need to say much about it, beyond pointing out that its operative principle is consent.  Its mechanism is the price system.

The tax economy is something fairly new—to America anyway.  A few generations ago the amount of wealth taken in taxes was only a sliver of the country's aggregate wealth.  But the government's share has increased to such an extent that it has become a whole separate economy.

~ Joseph Sobran, "The Two Economies," The Free Market, January 1991

Joseph Sobran on greed and the state

The state is never accused of greed.  There is no limit to what it may take from us. And those who live on what is taken in taxes are never accused of greed either.  Greed is virtually identified with the "profit motive." We have no invidious term for the parasitic motive.  The state and its clients are all but immune from moral criticism.

~ Joseph Sobran, "The Two Economies," The Free Market, January 1991

Mar 5, 2017

Business Week economist on government spending to fight the Great Depression

Just as we saved our way into depression, we must squander our way out of it.

~ Virgil Jordon, Business Week economist, 1932

Ralph Hawtrey on the American experiment of stabilizing the price level

The American experiment in stabilization from 1922 to 1928 showed that early treatment could shake a tendency either to inflation or to depression in a few months, before any serious damage had been done.  The American experiment was a great advance upon the practice of the 19th century.

~ Ralph G. Hawtrey, British Treasury's Director of Financial Studies, The Art of Central Banking (1932), p. 300

(Murray Rothbard describes Hawtrey as "one of the evil geniuses of the 1920s" in America's Great Depression, p. 159.)

Ludwig von Mises on indoctrination in public schools vs. popular culture

On the high school level and even on the college level the handing down of historical and economic knowledge is virtually indoctrination.  The greater part of the students are certainly not mature enough to form their own opinion on the ground of a critical examination of their teachers' representation of the subject.

If public education were more efficient than it really is, the political parties would urgently aim at the domination of the school system in order to determine the mode in which these subjects are to be taught.  However, general education plays only a minor role in the formation of the political, social, and economic ideas of the rising generation. The impact of the press, the radio, and environmental conditions is much more powerful than that of teachers and textbooks.  The propaganda of the churches, the political parties, and the pressure groups outstrips the influence of the schools, whatever they may teach.  What is learned in school is often very soon forgotten and cannot carry on against the continuous hammering of the social milieu in which a man moves.

~ Ludwig von Mises, Human Action, pp. 877-878

Mar 4, 2017

Warren Buffett fails to see any bubble behavior (2017)

It's not like during the internet boom or – and there have been various real peaks – I've written a couple of times when I thought things were getting out of hand on the high side. And-that's not now. Now, if interest rates dramatically upward, then these valuations would come down, in my view. But I don't see the games being played on a big scale that you had in the late '60s or that you had around the internet time, you know. I don't see lots of just fallacies being promoted. Or games being built on accounting tricks and that sort of thing.

~ Warren Buffett, CNBC interview, February 27, 2017

Warren Buffett on the difference between a diplomat and a lady

If a diplomat says yes, he means maybe. If he says maybe, he means no. And if he says no, he's no diplomat. And if a lady says no, she means maybe. And if she says maybe, she means yes. And if she says yes, she's no lady.

~ Warren Buffett

Mar 3, 2017

Kevin Duffy on the difference between slavery and government

200 years ago slavery was rationalized on the basis chaos would ensue without it. Today government is rationalized on the same basis. How will we be judged in 200 years?

~ Kevin Duffy

Mar 2, 2017

E.A. Blair on intellectuals

Some ideas are so stupid only intellectuals believe them.

 ~ E.A. Blair

Feb 21, 2017

Seattle Post-Intelligencer gives debut of The Bachelor two thumbs down (2002)

ABC could have saved a ton on limousine fees if it had shrink-wrapped 25 women and placed them in the meat case at Safeway.

 ~ Seattle Post-Intelligencer, 2002

Feb 6, 2017

Bill Bonner: "investment markets reward virtue and punish sin"

We are, frankly, in far too much awe of the world, and too deeply entertained by it, to think that we can understand it today or foretell tomorrow.  Life's most attractive components - love and money - are far too complex for reliable soothsaying.  Still, we can't resist taking a guess.

We may not know how the world works, but we are immodest enough to think we can know how it does not work.  The stock market is not, for example, a simple mechanism like an ATM machine, where you merely tap in the right numbers to get cash out when you need it.  Instead, the investment markets - like life itself - are always complicated, often perverse, and occasionally absurd.  But that does not mean that they are completely random; though unexpected, life's surprises may not always be undeserved.  Delusions have consequences.  And, sooner or later, the reckoning day comes and the bills must be paid.

In this sense, the investment markets are not mechanistic at all, but judgmental.  As we will see, they reward virtue and punish sin.

~ Bill Bonner, Financial Reckoning Day (2006), p. 2

Feb 5, 2017

The New York Times: "A taxi medallion is comparable to buying an apartment in Manhattan" (2011)

A taxi medallion is comparable to buying an apartment in Manhattan. It will always make good money and pay for itself.

~ The New York Times, 2011

Bill Bonner on the upward (bumpy) slope of human progress

When it comes to science and technology, man learns.  When it comes to love, war, and finance, he makes the same mistakes over and over again.

~ Bill Bonner

Feb 2, 2017

Kevin Duffy on the learning process

The learning process, if pursued long enough, goes through many phases: trepidation, pain, comfort, confidence, overconfidence, and ultimately humility.

Feb 1, 2017

We are not going to achieve a new world order without paying for it in blood as well as in words and money.

~ Arthur Schlesinger, Jr., Foreign Affairs, July/August 1995

Jan 31, 2017

Jim Grant reports on the bond bubble: "$13 trillion of bonds are priced with negative yields"

Arbor Quantitative Analytics reports that the 30-year Treasury bond delivered a 10% return in the 10 days ended last week, among the best such sprints on record (it was in the 99.5th percentile).  Tuesday's Financial Times reported a drop in 10-year gilt yields to 0.71%, far below any yield recorded even when the pound was convertible into gold at a fixed price.  "Across the world," the paper said, "government bond yields continue to collapse as economists forecast low global growth and greater stimulus from central banks in spite of years of monetary easing.  Dutch benchmark 10-year rates are now negative, joining those of Japan, Germany and Switzerland."  According to Bank of America Merrill Lynch, $13 trillion of bonds are priced with negative yields, up from just about none two years ago.

~ Jim Grant, Grant's Interesting Rate Observer, "Remember the Shell Oil 2 1/2s of 1971," July 15, 2016

Grant's: "sovereign debt is the biggest bubble since the Bronze Age" (2016)

If practice makes perfect, Grant's is unrivaled in calling the top in bond prices.  We have done so repeatedly over the course of many years, even if not lately; since 2014, our line has rather been "one last gasp" for the bulls.  We now say that the last gasp has been gulped.  With all the fluency that comes with study and repetition, we say that sovereign debt is the biggest bubble since the Bronze Age, or maybe since ancient Sumer.  The notion that negative-yielding bonds, denominated in a fiat currency, are a "safe" asset is a misconception that belongs in the next edition of Extraordinary Popular Delusions and the Madness of Crowds.  We are bearish on bonds, especially the ones that, like new cars on a dealer's lot, positively guarantee the owner a loss as soon as he takes possession of his property.

~ Jim Grant, Grant's Interesting Rate Observer, "Remember the Shell Oil 2 1/2s of 1971," July 15, 2016

Jan 20, 2017

Donald Trump inauguration: protection leads to prosperity

Protection will lead to great prosperity and strength.

~ President Donald J. Trump, inauguration speech, January 20, 2017

Jan 18, 2017

Fast Money trader thinks every dip is a buying opportunity, even the terrifying 2% variety

When we get a 2% correction we’ll find out who has the stones to buy.

~ John Najarian, as appeared on CNBC’s Fast Money, January 17, 2017

Jan 16, 2017

Tony Hawk on success

My definition of success is doing what you love.  I feel many people do things because they feel they have to, and are hesitant to risk following their passion.

~ Tony Hawk, professional skateboarder and entrepreneur

Grace Hopper on information overload

We’re flooding people with information.  We need to feed it through a processor.  A human must turn information into intelligence or knowledge.  We’ve tended to forget that no computer will ever ask a new question.

~ Grace Hopper, computer scientist and U.S. Navy admiral

Benjamin Disraeli on adversity

There is no education like adversity.

~ Benjamin Disraeli, British statesman

Mehmet Oz on anger

The opposite of anger is not calmness, it’s empathy.

~ Mehmet Oz, physician

Joe DiMaggio on leadership

A person doing his or her best becomes a natural leader, just by example.

~ Joe DiMaggio

Marilyn vos Savant

Being defeated is often a temporary condition.  Giving up is what makes it permanent.

~ Marilyn vos Savant, columnist

Jan 11, 2017

Scott Peck on white lies

White lies may be every bit as destructive as black ones.  A government that withholds essential information from its people by censorship is no more democratic than one that speaks falsely...  Indeed, because it may seem less reprehensible, the withholding of essential information is the most common form of lying, and because it may be the more difficult to detect and confront, it is often even more pernicious than black-lying.

White-lying is considered socially acceptable in many of our relationships because "we don't want to hurt peoples' feelings.  Yet we may bemoan the fact that our social relationships are generally superficial.  For parents to feed their children a pap of white lies is not only considered acceptable but is thought to be loving and beneficent...  Usually such withholding and lack of openness is rationalized on the basis of a loving desire to protect and shield their children from unnecessary worries...  The result, then, is not protection but deprivation.  The children are deprived of the knowledge they might gain about money, illness, drugs, sex, marriage, their parents, their grandparents and people in general...  Finally, they are deprived of role models of openness and honesty, and are provided instead with role models of partial honesty, incomplete openness and limited courage.

~ M. Scott Peck, M.D., The Road Less Traveled, "Withholding Truth," pp. 59-60

Scott Peck on the link between lies and mental illness

One of the roots of mental illness is invariably an interlocking system of lies we have been told and lies we have told ourselves.

~ M. Scott Peck, M.D., The Road Less Traveled, "Openness to Challenge," p. 58

Scott Peck on the paths to reality and delusion

A life of total dedication to the truth also means a life of willingness to be personally challenged.  The only way that we can be certain that our map of reality is valid is to expose it to the criticism and challenge of other map-makers.  Otherwise we live in a closed system - within a bell jar, to use Sylvia Plath's analogy, rebreathing only our own fetid air, more and more subject to delusion.

~ M. Scott Peck, M.D., The Road Less Traveled, "Openness to Challenge," p. 52

Scott Peck: truth is more vital to our self-interest than comfort

We must always hold truth, as best we can determine it, to be more important, more vital to our self-interest, than our comfort.  Conversely, we must always consider our personal discomfort relatively unimportant and, indeed, even welcome it in the service of the search for truth.  Mental health is an ongoing process of dedication to reality at all costs.

~ M. Scott Peck, M.D., The Road Less Traveled, p. 50

Scott Peck on personal roadmaps and dedication to reality

Our view of reality is like a map with which to negotiate the terrain of life.  If the map is true and accurate, we will generally know where we are, and if we have decided where we want to go, we will generally know how to get there.  If the map is false and inaccurate, we generally will be lost. (p. 44)


By the end of middle age people have given up the effort.  They feel certain that their maps are complete and their Weltanschauug is correct (indeed, even sacrosanct), and they are no longer interested in new information.  It is as if they are tired.  Only a relative and fortunate few continue until the moment of death exploring the mystery of reality, ever enlarging and refining their understanding of the world and what is true. (p. 45)


Rather than try to change the map, an individual may try to destroy the new reality.  Sadly, such a person may expend much more energy ultimately in defending an outmoded view of the world than would have been required to revise and correct it in the first place. (p. 46)

~ M. Scott Peck, M.D., The Road Less Traveled (1978), "Dedication to Reality"

Jan 9, 2017

Rodney Stark on why the fall of Rome was a blessing

The fall of Rome was not a tragic setback; had the empire prevailed, there would be nothing to call Western Civilization. If Rome still ruled, Europe would be mired in a brutal command economy, there would have been very little innovation of any kind, and the rest of the world probably would be much as Europeans found it in the fifteenth and sixteenth centuries. Empires are the enemies of progress!

 ~ Rodney Stark, The Victory of Reason, page 75

Jan 7, 2017

Stephanie Pomboy is bullish on fiscal stimulus under Trump

We can finally get back to the business of real economic growth - real men building real things.  It all sounds fabulous.  And it will be - if and when it happens.

~ Stephanie Pomboy, MacroMavens, January 7, 2016
(as quoted by Kopin Tan in the Jan. 9th issue of Barron's)

Peter Drucker on leadership

Effective leadership is not about making speeches or being liked; leadership is defined by results, not attributes.

~ Peter Drucker, management consultant

Nelson Mandela on change

One of the things I learned when I was negotiating was that until I changed myself I could not change others.

~ Nelson Mandela

Gail Ayers on technology

Technology is simply a tool supporting human brilliance.

~ Gail Ayers, business executive

Carl Jung on action

You are what you do, not what you say you'll do.

~ Carl Jung, psychotherapist

Robert Louis Stevenson on achievement

Don't judge each day by the harvest you reap but by the seeds that you plant.

~ Robert Louis Stevenson

Christopher Morley on persistence

Big shots are only little shots who keep shooting.

~ Christopher Morley, novelist

Twyla Tharp on communication

It is extremely arrogant and very foolish to think that you can ever outwit your audience.

~ Twyla Tharp, dancer

B.C. Forbes on reading

The man who is too busy to read is never likely to lead.

~ B.C. Forbes, magazine editor

Caterina Fake on working hard vs. working smart

So often people are working hard at the wrong thing.  Working on the right thing is probably more important than working hard.

~ Caterina Fake, entrepreneur

Charles Munger on reading and wisdom

In my whole life, I have known no wise people who didn’t read all the time—none, zero.

~ Charles Munger

Jan 5, 2017

Frederic Bastiat

The worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended.

~ Frederic Bastiat

Pablo Picasso on procrastination

Only put off until tomorrow what your are willing to die having left undone.

~ Pablo Picasso