Jun 28, 2017

Nassim Taleb and Mary Blythe on suppressing volatility

Complex systems that have artificially suppressed volatility tend to become extremely fragile, while at the same time exhibiting no visible risks.

~ Nassim Taleb and Mary Blythe

Jun 26, 2017

Lao Tzu on leadership

A leader is best when people barely know that he exists; not so good when people obey and acclaim him; worst when they despise him.

~ Lao Tzu

Jun 24, 2017

Brooke Lorimer on empathy and kindness

Everyone you meet is fighting a battle you know nothing about.  Be kind.  Always.

~ Brooke Lorimer, Guideposts reader, Boulder, Co

Tony Robbins on change

If you do what you've always done, you'll get what you've always gotten.

~ Tony Robbins, motivational speaker

Jun 23, 2017

Steve Ballmer on the importance of good ideas

A great team, great energy, and great hard work will never make up for a bad idea.

~ Steve Ballmer, 2014 commencement speech, USC's Marshall School of Business

Peyton Manning on the value of experts

When you are chided for your naivete - and you will be - remind your critics that an amateur built the ark and experts built the Titanic.

~ Peyton Manning, 2014 commencement speech, University of Virginia

Tony Dwyer thinks "fear dominates market activity" (2000)

The history of the market has shown us that, when fear dominates market activity, it's an opportunity to buy stocks at a better price.

~ Anthony Dwyer, chief market strategist, Kirlin Holdings, as quoted in The Wall Street Journal, February 3, 2000

Jun 20, 2017

B.C. Forbes on complexity

The man of fixed ingrained principles who has mapped out a straight course, and has the courage and self-control to adhere to it, does not find life complex.  Complexities are all of our own making.

~ B.C. Forbes, publisher

Voltaire on appreciation

Appreciation is a wonderful thing; it makes what is excellent in others belong to us as well.

~ Voltaire, satirist

Leo Buscaglia on talent

Your talent is God's gift to you.  What you do with it is your gift back to God.

~ Leo Buscaglia, writer, lecturer

Aristotle on good habits

We are what we repeatedly do.  Excellence, therefore, is not an act but a habit.

~ Aristotle, philosopher

Atlanta Fed president: U.S. economy "envy of the world" (2001)

In the long term, the moderation of growth that we'll witness in 2001 will be a mostly healthy thing.  It will help the economy avoid some serious imbalances that might otherwise have begun to accumulate, and it will help ensure that growth remains sustainable.

~ Jack Guynn, Atlanta Federal Reserve President, "U.S. slowdown dubbed 'healthy'," Investors Business Daily, January 9, 2001

(Guynn called the U.S. economy "the envy of the world.")

Nolan Bushnell on taking action

Everyone who's ever taken a shower has an idea.  It's the person who gets out of the shower, dries off and does something about it who makes a difference.

~ Nolan Bushnell, executive

Publilius Syrus on learning from mistakes

He is foolish to blame the sea who is shipwrecked twice.

~ Publilius Syrus, writer

Thomas Edison on persistence

The first requisite of success is the ability to apply your physical and mental energies to one problem without growing weary.

~ Thomas Edison, inventor

Michael Goodwin on how 2016 election exposed bias of mainstream media

I’ve been a journalist for a long time. Long enough to know that it wasn’t always like this. There was a time not so long ago when journalists were trusted and admired. We were generally seen as trying to report the news in a fair and straightforward manner. Today, all that has changed. For that, we can blame the 2016 election or, more accurately, how some news organizations chose to cover it. Among the many firsts, last year’s election gave us the gobsmacking revelation that most of the mainstream media puts both thumbs on the scale—that most of what you read, watch, and listen to is distorted by intentional bias and hostility. I have never seen anything like it. Not even close.

~ Michael Goodwin, chief political columnist, The New York Post, "The 2016 Election and the Demise of Journalistic Standards," Imprimis, May/June 2017

Jun 14, 2017

Time's Daniel Kadlec on the tech bubble and related anti-bubbles

A massive liquidation of nontech assets is under way as people reach for the means to buy more Cisco, 3com and Apple. It's an incredible display of pack investing that begs the question, Is NASDAQ bulletproof?

[...]

The reallocation is not just in assets but also in talent.  Bankers, lawyers and money managers are fleeing careers in depressed pockets of the market like real estate to hitch a ride to Silicon Valley.

The shift is clearest, though, in hard numbers.  In January, investors poured a record $40 billion into stock funds, and $29 billion of it went into aggressive growth and growth funds - the ones that own NASDAQ stocks.  The rest went into sector funds, which are 75% invested in tech.  Equity-income funds and growth and income funds (which favor blue chips) had outflows.  Bond funds also had outflows - a hefty $10 billion worth.

By one measure, the NASDAQ accounts for every penny made in the stock market the past 12 months.  In that span, the market value of all U.S. stocks increased $2.5 trillion, but NASDAQ stocks alone rose $3.1 trillion.  That means non-NASDAQ stocks fell $600 billion.  Foreigners are equally gaga.  Last year they were net sellers of Treasury bonds for the first time, and they bought a record $107 billion of U.S. stocks.  Care to guess which ones?

~ Daniel Kadlec, "What Blue Chips?  The NASDAQ is killing the Dow, which is why it's more critical than ever that you stay diversified,"

Portfolio manager sees valuations as reasonable (2000)

We think there is some sustainability here given valuations and expected growth.  We have positioned our customers with that in mind.

~ Paul Cox, portfolio manager, Commerce Fund in St. Louis, MO, as quoted in The Wall Street Journal, September 29, 2000

Steve Forbes advocates aggressive easing after tech bubble unwind (2001)

With glacial speed, Alan Greenspan is coming around to the view that a faltering economy, not incipient inflation, is the most immediate threat. But instead of moving speedily, the Federal Reserve will soon begin a series of baby-step reductions in interest rates. This sluggish, woolly-mammoth-like response is a danger.

Longer term, though, there is another potential hazard. The Fed could fall into the trap in which the Bank of Japan finds itself: Interest rates are cut and cut and cut, yet the economy doesn’t recover. The U.S. experienced such a phenomenon in the 1930s, when Treasury bill rates were almost 0% and unemployment remained in double digits until the Second World War. Pushing on a shoestring, it was called.

~ Steve Forbes, "Going the Way of Japan?," Forbes, January 22, 2001

Jun 13, 2017

Ken Fisher: tech bubble still in the middle of bursting (2001)

People keep asking if the technology drubbing is over - or will be soon.  As long as folks keep asking, you don't have to.  It isn't over until they stop asking.  The end is silent.  Make no mistake, this is the middle of the bursting of a classic sector bubble.

~ Ken Fisher, "Tech 2001," Forbes, January 22, 2001

Federated Investors CIO advises buying tech dip (2000)

With tech valuations having reached more reasonable levels, this could be an excellent time to rotate back into technology.

~ J. Thomas Madden, chief investment officer, Federated Investors, as quote in The Wall Street Journal, September 20, 2000

Ronald Reagan on attitude

A pessimist is someone who complains about the noise when opportunity knocks.

~ President Ronald Reagan

Vince Lombardi on excellence

The quality of a person's life is in direct proportion to his commitment to excellence.

~ Vince Lombardi, football coach

Christina Baldwin on forgiveness

Forgiveness is the act of admitting we are like other people.

~ Christina Baldwin, writer

Ronald Reagan on attitude

Optimism is a choice, and one of the most powerful we can make.

~ President Ronald Reagan

Johann Wolfgang von Goethe on potential

If I accept you as you are, I will make you worse; however, if I treat you as though you are what you are capable of becoming, I help you become that.

~ Johann Wolfgang von Goethe, poet

Murray Rothbard on the nature of the State

The State, in the words of Oppenheimer, is the “organization of the political means”; it is the systematization of the predatory process over a given territory.  For crime, at best, is sporadic and uncertain; the parasitism is ephemeral, and the coercive, parasitic lifeline may be cut off at any time by the resistance of the victims.  The State provides a legal, orderly, systematic channel for the predation of private property; it renders certain, secure, and relatively “peaceful” the lifeline of the parasitic caste in society.  Since production must always precede predation, the free market is anterior to the State.  The State has never been created by a “social contract”; it has always been born in conquest and exploitation.  The classic paradigm was a conquering tribe pausing in its time-honored method of looting and murdering a conquered tribe, to realize that the time-span of plunder would be longer and more secure, and the situation more pleasant, if the conquered tribe were allowed to live and produce, with the conquerors settling among them as rulers exacting a steady annual tribute.

~ Murray Rothbard, The Anatomy of the State (1974)

Michael Corleone on politics and crime

Politics and crime, they're the same thing.

~ Michael Corleone in The Godfather Part III

Abby Joseph Cohen: "The intermediate and longer-term view remains bright" (2000)

The intermediate and longer-term view remains bright.

~ Abby Joseph Cohen, as quoted in The Wall Street Journal, September 22, 2000

(WSJ: Stocks did benefit from another round of bullish comments from Goldman Sachs investment strategist Abby Joseph Cohen.  She published a report saying oil, the euro and 3rd quarter corporate profits will prove to be "short-lived" worries.)

Abby Joseph Cohen remains bullish after stocks bounce from March-May 2000 selloff

We had gotten to notably low levels of valuation.  [Now,] we're back in the range of where we should be.

~ Abby Joseph Cohen, as quoted in The Wall Street Journal, June 5, 2000

PaineWebber strategist justifies high tech stock valuations

A very fast growth rate is worth a very high price-earnings multiple.  In a low inflation environment, [a stock growing at 15% a year] is worth a P/E of 65.  And a 20% growth stock is worth a P/E of 106.

~ Edward Kerschner, investment strategist, PaineWebber, as quoted in The Wall Street Journal, June 2, 2000

(Kershner was defending the high valuations of large cap tech stocks like Cisco Systems, America Online, Hewlett-Packard and Microsoft at the top of the 2000 tech bubble.)

Theodore Roosevelt on the key to success

The most important single ingredient in the formula of success is knowing how to get along with people.

~ President Theodore Roosevelt

Peter Drucker on logic and production

Production is not the application of tools to materials, but logic to work.

~ Peter Drucker, business writer

Malcolm Forbes on self esteem

Too many people overvalue what they are not, and undervalue what they are.

~ Malcolm Forbes, publisher

Napoleon Hill on persistence

Effort only fully releases to reward after a person refuses to quit.

~ Napoleon Hill, writer and teacher

Donald Trump on focus

I try to learn from the past, but I plan for the future by focusing exclusively on the present.  That's where the fun is.

~ Donald Trump, businessman

Mark Twain on innovation

You can't depend on your eyes when your imagination is out of focus.

~ Mark Twain, novelist, journalist

Benjamin Franklin on learning from adversity

Those things that hurt, instruct.

~ Benjamin Franklin

Bishop George Berkeley on honesty

Truth is the cry of all, but the game of few.

~ Bishop George Berkeley, philosopher

Robert Half on excuses

The longer the excuse, the less likely it's the truth.

~ Robert Half, employment coach

Thomas Wentworth Higginson on teamwork

Great men are rarely isolated mountain peaks; they are the summits of ranges.

~ Thomas Wentworth Higginson, minister, Army officer, lecturer

Winston Churchill on brevity

This report, by its very length, defends itself against the risk of being read.

~ Winston Churchill, British prime minister

Benjamin Franklin on humility

To be humble to superiors is a duty; to equals, courtesy; to inferiors, nobleness.

~ Benjamin Franklin

Benjamin Franklin on learning

An investment in knowledge always pays the best interest.

~ Benjamin Franklin, statesman, inventor, printer

Albert Einstein on innovation

If at first the idea is not absurd, then there is no hope for it.

~ Albert Einstein

Albert Einstein on discipline

The secret of discipline is motivation.  When a man is sufficiently motivated, discipline will take care of itself.

~ Albert Einstein

John Rollwagen on competitive advantage

The secret of business, especially these days, is to focus relentlessly on your unfair advantage - the thing you do that others don't.

~ John Rollwagen, former CEO, Cray Research

Ken Rosenthal on personal growth

Each time you decide to grow again, you realize you're starting at the bottom of another ladder.

~ Ken Rosenthal, entrepreneur

Ralph Waldo Emerson on conformity

A man must consider what a rich realm he abdicates when he becomes a conformist.

~ Ralph Waldo Emerson, essayist

George Washington Carver on excuses

Ninety-nine percent of the failures come from people who have the habit of making excuses.

~ George Washington Carver, botanist and chemist

Jun 9, 2017

Ed Yardeni dismisses any concerns of recession

If you don't have a boom, you don't get a bust.

~ Ed Yardeni, as appeared on CNBC's Fast Money, June 9, 2017

(Yardeni explained why slow economic growth is bullish for stocks.)

Jun 7, 2017

Leonardo da Vinci on vision

There are three classes of people: those who see, those who see when they are shown, those who do not see.

~ Leonardo da Vinci

None of 89 economists surveyed expect recession by 2019

Of 89 economists surveyed by Bloomberg, not a single one currently expects a GDP contraction in 2017, 2018 or 2019. The median expected growth rate in these years ranges from 2.2 to 2.4 percent.

~ "2017 In Gold We Trust" report, Incrementum AG, p. 28

Jun 5, 2017

Louise Nevelson on aging and creativity

I never feel age...  If you have creative work, you don't have age or time.

~ Louise Nevelson, sculptor

Mike Tyson on best laid plans

Everybody has a plan until they get hit. Then, like a rat, they stop in fear and freeze.

[...]

If you’re good and your plan is working, somewhere during the duration of that, the outcome of that event you're involved in, you're going to get the wrath, the bad end of the stick. Let's see how you deal with it. Normally people don’t deal with it that well.

~ Mike Tyson, boxer

May 29, 2017

John Browne on U.S. history of socialized medicine

Contrary to the current rhetoric, Obamacare was not in fact America’s first foray into socialized medicine, and it did not represent the kind of crossed Rubicon that Republicans like to accuse it of being. The door had first been opened in the Second World War, when government imposed wage controls that gave incentives to employers to bundle health insurance into compensation packages. When the government then made employer-provided insurance tax-deductible, such plans became the norm. But the government really charged into the market in 1965, with the creation of Medicare and Medicaid. For years, Republicans have twisted themselves into logic pretzels in order to argue that Obamacare is socialism while Medicare is not.

In granting a new entitlement, Obamacare did nothing to address problems that have plagued the U.S. health-care system. It did not encourage competition among insurers, it demanded a “one size fits all” approach to coverage, and, most egregiously, did nothing to contain the rising medical costs that threaten to bankrupt the U.S. To add insult to injury, it required people to buy insurance they didn’t want.

~ John Browne, Euro Pacific Capital, "What We've Learned From Trying Out Socialized Medicine," March 30, 2017

Ulysses S. Grant on the Civil War and slavery

If I thought this war was to abolish slavery, I would resign my commission and offer my sword to the other side.

~ Ulysses S. Grant, Union general

May 28, 2017

Rose Wilder Lane on the Progressive Movement and influence of European national socialism

Meanwhile, during half a century, reactionary influences from Europe have been shifting American thinking onto a basis of socialistic assumptions. In cities and states, both parties began to socialize America with imitations of the Kaiser’s Germany: social welfare laws, labor laws, wage-and-hour laws, citizens’ pension laws, and so-called public ownership.

Eleven years ago this creeping socialism sprang up armed with Federal power, and Americans—suddenly, it seemed—confronted for the first time in their lives a real political question: the choice between American individualism and European national socialism.

Will an American defend the Constitutional law that divides, restricts, limits and weakens political-police power, and thus protects every citizen’s personal freedom, his human rights, his exercise of those rights in a free, productive, capitalist economy and a free society?

Or will he permit the political structure of these United States to be replaced by a socialist state, with its centralized, unrestricted police power regimenting individuals into classes, suppressing individual liberty, sacrificing human rights to an imagined “common good,” and substituting for civil laws the edicts, or “directives,” once accurately called tyranny and now called administrative law?

This is the choice that every American must make. There is no escape from this choice; the present situation puts it before us and requires a decision.

~ Rose Wilder Lane, "Give Me Liberty," 1944 (first published in 1936)

Rose Wilder Lane: Can individualism survive in the U.S.?

There is nothing new in planned and controlled economy. Human beings have lived under various forms of that social security for six thousand years. The new thing is the anarchy of individualism, which has been operating freely only in this country for a century and a half.

When I first wrote this book ten years ago, I asked myself whether individualism has enough social vitality to survive in a world turning back to the essentially medieval, static forms. Can individualism, which by its very nature has no organization and no leader, stand against the determined attack of a small group, organized, controlled, and fanatically sure that a strong man in power can give a people better lives than they can create for themselves?

The spirit of individualism is still here. There are some 130,000,000 human beings in these United States, and not one of us has escaped anxiety, and very few of us have not been forced to reduce our standard of living during these past few years. The number of us who have been out of work and facing actual hunger is not known; the largest estimate has been twelve million. Of this number, barely a third appeared on the reported relief rolls. Somewhere those millions in need of help, who were not helped, are still fighting through this depression on their own.

Millions of farmers are still lords on their own land; they are not receiving checks from the public funds to which they contribute their increasing taxes.

Millions of men and women have quietly been paying debts from which they asked no release; millions have cut expenses to the barest necessities, spending every dime in fear that soon they will have nothing, and somehow being cheerful in the daytime and finding God knows what strength or weakness in themselves during the black nights.

Americans are still paying the price of individual liberty, which is individual responsibility and insecurity.

~ Rose Wilder Lane, "Give Me Liberty," 1944 (first published in 1936)

Rose Wilder Lane: "Is personal freedom worth the effort?"

The question is whether personal freedom is worth the terrible effort, the never-lifted burden, and the risks, the unavoidable risks, of self-reliance.

VII

For each of us, the answer to that question is a personal one.  But the final answer cannot be personal, for individual freedom of choice and of action cannot long exist except among multitudes of individuals who choose it and who are willing to to pay for it.

Multitudes of human beings will not do this unless their freedom is worth more than it costs, not only in value to their own souls but also in terms of the general welfare and the future of their country, which means the welfare and the future of their children.

~ Rose Wilder Lane, "Give Me Liberty," 1944 (first published in 1936)

May 20, 2017

Bill Laggner on a 20-something real estate speculator from Toronto

On a recent NY trip my Uber ride into the city was shared with Lola, a visitor from Toronto.  Our conversation began with why we were visiting the city and her interest in real estate, specifically Toronto where she was an investor in condos along with her brother.  They owned multiple condos, all of which were financed with little or nothing down.  This of course prompted several questions about prices, location and whether or not she was nearing a "flip" of her rented merchandise.  At this point, 20-something Lola looked at me with disdain and the following response: 
"Why would I flip the condos when my brother and I have made several million dollars each and lenders are lined up to lend us more money to but into a project next door?  And the project next door will be incredible because my friend, Drake (rap "artist"), is going to get involved in marketing the project."
After listening to Lola I suggested she read a bit about the US housing bubble circa '05-'08 or take a shortcut and watch The Big Short.  In fact, I emphasized that our firm was one of the most outspoken critics of the central banking inflated housing bubble while profiting from the inevitable demise.  Continuing the conversation about leverage and how it seduces many on the way up while destroying many on the way down it was clear that Lola wasn't interested in my advice.  It reminded me of my trip to southern California in '06, months before the crash in real estate unfolded.

~ Bill Laggner, Bearing Asset Management, May 20, 2017

Brooksley Born on the role of OTC derivatives in the credit bubble

It was my worst nightmare coming true. Nobody really knew what was going on in the market.  The toxic assets of many of our biggest banks are OTC derivatives and caused the economic downturn that made us lose our savings, lose our jobs, lose our homes.  It was very frightening.

~ Brooksley Born, October 20, 2009

Nick Colas: stocks would rally 3-5% if Trump resigned

What would U.S. stocks do if President Trump suddenly resigned? Based on recent price action, the answer is clear: Rally 3-5%, at least, over a day or two. U.S. equities see through the headlines (like the Comey firing) and essentially believe two things. First, corporate earnings are growing nicely. Second, the Republican-led Congress needs to pass tax reform by the 2018 midterm elections.

~ Nick Colas, chief market strategist, Convergex, May 12, 2017

(See "Here's why stocks could rally if Trump heads for the exit, MarketWatch.com, May 12, 2017.)

Jeremy Siegel: the Dow would rally 1,000 points if Trump resigned

If Donald Trump resigned tomorrow, I think the Dow would go up 1,000 points.

One has to remember that the rally since Trump’s election has been based not on Trump’s agenda [but] on the Republican agenda. I would say that 90% of the people, investors on Wall Street, and most of the CEOs, would prefer a President Michael Pence, rather than Donald Trump. So, in a way you know what kind a trouble he’d be, might he have to resign, might he be impeached... all that does not derail the Republican agenda, upon which this rally was based.

~ Jeremy Siegel, CNBC interview, May 17, 2017

(See "Man who called Dow 20,000 says stock market could see 1,000-point surge if Trump resigns," MarketWatch.com, May 18, 2017.)

May 5, 2017

Warren Buffett on the economy (2017)

I don't see anything but a steady rise.

~ Warren Buffett, CNBC interview, May 5, 2017

May 2, 2017

Donald Trump on Janet Yellen and her low interest rate policy

I like her, I respect her…I do like a low interest rate policy, I must be honest with you.

~ President Donald Trump, interview with The Wall Street Journal, April 12, 2017

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