Tag Archives: The Rational Optimist

Relationship Between Stock Returns and Interest Rate Movements

I try to find evidence that refutes my theses on expected market returns to avoid behavioral traps. This graph from JP Morgan Asset Management’s research team offers some optimism for equities for rolling two-year periods if the Fed starts to … Continue reading

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Market Overvaluation: It’s Not Just the CAPE

After my last post, I saw a blog post on another value investing site that criticized the type of CAPE analysis that I presented last week to indicate the market was overvalued. The author of that post suggests that the … Continue reading

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Why the Singularity Makes Me a Rational Optimist

The main reason that I am a rational optimist in the long run, like Matt Ridley, is that technology is expanding exponentially; it is growing at a growing rate. Kurzweil in his book, The Singularity is Near, discusses how difficult … Continue reading

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This is the Worst Recovery in the Post WWII Era

I think my former Wall Street colleagues know this without the need to read a chart. I added Sufi and Mian’s blog to the economics blogroll on the right after seeing the CFA Institute’s webcast of Sufi’s presentation at a conference … Continue reading

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A Classic Example of Why Discipline and Wealth Go Hand-in-Hand

A great quote from The Warren Buffett Way, Third Edition, (2014) by Robert G. Hagstrom. The difference between Warren Buffett and most investors has more to do with discipline than just about any other quality. There are plenty of smart investors, … Continue reading

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Mohnish Pabrai Has Not Made an Investment in a New Idea in Over 18 Months

Forbes once identified Mohnish as one of the investment managers who could assume the value-investing guru mantle from Buffett. In his 2013 Annual Letter, Pabrai wrote that he has not found a new idea in which to invest in over eighteen … Continue reading

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Thinking in a Foreign Language Helps Reduce Loss Aversion

According to behavioral finance theory, Loss Aversion causes investors to sell winning investments quickly in order to “lock in” gains and to hold on to losing investments in order to get even, regardless of the underlying fundamentals, changes in circumstances, or overall … Continue reading

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Motives vs. Results

Motives vs. results. A lot of truth here… Continue reading

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An Unusually Large Herd of Grey Swans

Events that can have a significant impact on the economy and capital markets have become known as swans of various shades thanks largely to Nassim Taleb’s book, The Black Swan, in which Taleb reminded us of Karl Popper’s criticism of … Continue reading

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Equity Market Histogram: Another Victory for the Mode in 2011

As I recall, I said at the beginning of 2011 that predictions are worthless, but if one takes an outsider’s view there is a 70% chance that the market’s total return will be positive in 2011 and that the most likely event … Continue reading

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