Bubbles

My Take on Bitcoin 5 Years Later

I thought it would be appropriate to sit down and write this article given all the frenzy and talk behind Bitcoin, and the growing interest and seemingly mania like environment around it.

The Media Noise can be Deafening

Most people would argue that living in a digital world, with instant access to an endless stream of information has made us smarter and more self-empowered than past generations. Investors believe that it has “leveled the playing field”, enabling them to make investment decisions based on the same information once only available to the investment pros.

Managing Investment Risks

In my opinion, it is impossible to predict future stock market returns. Investment models can produce hypothetical returns but they can’t account for future events. So, in my opinion, investors who manage their investments based on market performance or what they perceive as opportunities for better returns have very little control over the outcome.

Skill Versus Luck in Investing

Shift from QE to forward guidance

In case you missed it Kevin Warsh was on CNBC this morning. Again he made some great points including highlighting one of the downfalls of QE which he suggests has led to a misallocation and “malinvestment” of capital as oppose to hyperinflation which many doomsdayers have been harping on since the beginning of Fed’s Zero Interest Rate and QE policies.

Fed bogey may change

Research work done by economists at IMF as well as work done by Goldman Sachs economist Jan Hatzius are beginning to suggest that the Federal Reserve may be planning to change the threshold for its Zero Interest Rate Policy (ZIRP) from their original 6.5% unemployment rate and 2.5% inflation rate to perhaps a lower rate of unemployment such as 6.0% to even 5.5% rate.

How The Economic Machine Works

In this video Bridgewater’s Ray Dalio explains how in his view the economy is like a machine.   Suggesting that many people don’t understand it – or they don’t agree on how it works – and this has led to a lot of needless economic suffering.

All Financial Crisis End

Just about a week ago on November 20th the S&P 500 Index closed at 752 down 22% for the month, but in yet another sign of market’s volatility the index rallied 19% from the lows in just five days to close at 896 down 7% (vs. 22%) for the month.

Fooled by Randomness

This past month I decided to re-read Fooled by Randomness an excellent book written by Nasim Taleb. The book is a great read for anyone that hasn’t looked or isn’t used to looking at various events from a mathematical or statistical perspective.

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