Just a quick post today. I’m watching CNN, hearing a lot about the mother who started beating her child because he was participating in a riot. It doesn’t seem like there’s much debate around how great this mother was, how she was doing the right thing. This is one of those many moments where cable news is […]
Five visualizations of Bend, OR half-marathon results
Four graphs of Warren Buffett’s top bets
With $106 billion to stash away, Warren Buffett’s Berkshire Hathaway (BRK-A) depends on making good financial decisions. If you’re a value investor and are fishing for good ideas, you could certainly do worse than to fish in the Berkshire pond as shown by this CNBC portfolio tracker. But for me, a table isn’t enough, so […]
Hoping for a crash
I’ve written a few posts on how stocks are fairly valued, or how you might be waiting forever for a crash. I’ve been derided as a wishful thinker, someone ignoring the reality of high P/E ratios and Fed easy money. First of all, there’s no way Fed policy could even be considered easy. No economic indicator […]
I’m sick of hearing about “easy money”
I’m going to keep it short today, but I’m getting sick of hearing about the Fed’s easy money. How is Fed policy easy, exactly? Let’s start with whether prices are rising too quickly, signalling an overheating economy. Below is inflation in consumer prices since the 1960’s. Aside from the 2008 panic, we’re experiencing the lowest […]
The best- and worst-valued housing markets
In a previous post I looked at price-to-rent ratios in major markets. Like a PE ratio for stocks, price-to-rent ratio is a decent benchmark for judging whether housing markets are over or undervalued. There are caveats to this, of course, including prevailing mortgage rates, real estate taxes, income tax giveaways, etc. But for it’s simplicity, I […]
If the stock market crashes, the Fed has failed
Markets are on edge waiting for the Fed to raise rates. Conventional wisdom holds that the Fed’s easy money policies have inflated a stock market bubble. When they take away the punch bowl of low interest rates, the stock market will crash correct to long-term average valuations. To illustrate, below is a graph showing inverse […]
Stocks are the only securities not facing devaluation…but not really
For those who think the Fed is printing money willy nilly, stoking future inflation, think about what that means. Companies are the only organizations seemingly revaluing their “currencies”. More money from central banks chasing fewer equity securities means prices should be higher, as they are now. Is that how monetary policy is working at the […]
The answer is…Japan
There are a lot of questions as to the relationships between Fed money printing, interest rates and stock market returns. Most commentators seem of the opinion that easy Fed policy is blowing a stock market bubble, which will eventually burst. I’ve taken a bullish stance based on my understanding of monetary policy. Low interest rates are […]
How monetary policy is like Deadwood: the hot potato effect
I was reading Scott Sumner’s explanation of the hot potato effect, intrigued by how Fed policy is affecting asset prices. This is the $64,000 question: are low interest rates keeping asset prices artificially high, portending another bubble bursting? I’ve read a lot on this score, mainly from folks terrified by high PE/CAPE ratios. I personally believe the […]