“If history repeats itself, and the unexpected always happens, how incapable must Man be of learning from experience.” – George Bernard Shaw If history teaches us anything, it is that nobody seems to learn anything from it. Amazingly, a book published in 1914 outlined how to prevent the catastrophic banking crises of both the Great…
In Two Minutes, The Work of Centuries was Overturned
“In two minutes the work of centuries was overturned. Palaces and houses destroyed, churches overturned, their vaults torn asunder.” — Louis-Sebastian Mercer, French writer, 1789 227 years after the Storming of the Bastille, reactionary forces are still trying to impose brutal repression in Europe. Last week’s horrific terrorist attack in Nice, France occurred on the…
Why are Investors so Tribal?
Investors are often no better than a pack of chimps protecting their banana supply from their rivals. Six million years of history has ingrained this behavior in all of us. “Beware of hostile groups” runs through our veins just as much as flowing blood. The Nurture Assumption, by Judith Harris, gives a brilliant description of…
What High-fee Funds Can Learn from the Curse of the Cubs
High-fee, actively managed mutual funds are sold, not bought. Like the Chicago Cubs, their long-term record of achieving top performance is abysmal. The million-dollar question is: Why do people still stick with these different versions of atrocious track records? Thankfully, for long-suffering Cubs’ fans, things are changing for the better; but not so much for…
Funding an Expensive Goal with a High-Cost Product is a Bad Idea
Annuity salespeople are being threatened by the new regulations on retirement accounts; this is forcing them to expand their hunting grounds to prey on parents trying to fund college costs. Unfortunately, college savings accounts are not covered by the new rules. According to Troy Onink, many parents are being instructed by unscrupulous salespeople to cash…
Extractive Institutions Eventually Crumble
Most high-fee hedge funds and broker-dealers have one thing in common: They are large extractive institutions that will eventually fade into the dust bins of history. In the brilliant book by Daron Acemoglu and James Robinson, Why Nation’s Fail, the authors define extractive institutions as “those who empower and enrich the few at the expense…
Politics Makes Financial Markets Seem Sane
2016 may be looked back upon as the year the political crazies were allowed to board the ark. The cast of global characters this year blur the relation between farcical Onion headlines and reality. From Nigel Lafarge and Boris Johnson in the U.K., to Marine Le Pen across the channel, the global political circus…
Ten Timely Quotes from: Where Are the Customers’ Yachts?
Markets can be very violent on the downside. The old saying — Markets ride the escalator to the top and the elevator to the bottom — is still quite relevant. The past week or so has been a rocky one to say the least. This is the time to review the lessons learned from the…
Don’t Ask your Barber if you need a Haircut
The average public sector 403(b) plan is an unmitigated disaster. If anyone doubts this, they have simply not been paying attention. When I came across “How 403(b) Plans Can Inform 401(k) Plans,” written by Tim Walsh, a managing director of TIAA-CREF, I almost choked on my reheated panini. In the words of my friend Scott Dauenhauer, “This article is…
Scary vs. Dangerous
Some things might kill you instantly like a dagger through the heart. Others might ravage your body over a prolonged period of time, like a chronic disease. Investing follows these same principles. Unfortunately, a slow or quick death is often the result for many portfolios. There are many immediate portfolio killers but often what investors…
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