The Aleph Blog

Does it matter who controls the businesses of the country?  Does it matter who regulates the businesses of the economy?  Should these people be smart or dumb? One cost of the meddling that the Fed and Treasury have done through the bailouts is that dumb people are left in place.  People who mismanaged their...
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In my last post on this topic, I went over the orthodox and unorthodox monetary policy responses to the crisis in the US.  Here were the orthodox options: Lower the Fed funds rate into lower positive territory. Offer language that says that the Fed Funds rate will be low for a long time. Buy...
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I haven’t written about my portfolio management methods in a while.  I’ll be writing on this a few more times over the next week or so.  The eighth rule of my investing is: Make changes to the portfolio 3-4 times per year. Evaluate the replacement candidates as a group against the current portfolio. New...
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I have a post on the futility of fiscal policy coming, but the hubbub over Jackson Hole has made me alter my publishing schedule.  I want to give one more shot on the idea that the Fed is out of ammunition, and that unorthodox moves are more likely to scare the public than result...
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I’m working on my quarterly reshaping — where I choose new companies to enter my portfolio.  The first part of this is industry analysis. My main industry model is illustrated in the graphic.  Green industries are cold.  Red industries are hot.  If you like to play momentum, look at the red zone, and ask...
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11) I was surprised to read that there is not a perfect market in interest rate swaps.  They are so vanilla, but counterparty risk interferes. 12) There is always a skunk at the party, and who better than Baruch to dis bonds?  I half agree with him.  Half, because the momentum can’t be ignored...
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1) Start with the big one from yesterday.  On of my favorite monetary heretics, Raghuram Rajan, whose excellent book I reviewed, Fault Lines, pointed out how he had gotten it right prior to the crisis, versus many at the Fed who blew it badly.  Rajan suggests that Fed Funds should be at 2-2.25%, which...
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Illiquidity is an underrated risk.  Most financial company failures are due to illiquidity, which usually takes the form of too many illiquid assets and liquid liabilities.  Adding to the difficulty is that it is generally difficult to price illiquid assets, because they don’t trade often. So where do we see failures due to illiquidity?...
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People are good about making binary comparisons for the most part, leaving aside come of the more complex choices highlighted in the book, “Priceless.”  Would you like coffee or tea?  Do you prefer this room painted blue or white? Where things get complex is when there are a zillion choices, and your quest is...
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1) Kind of like my thesis that the States give a better picture of the economy than the Federal Government, I agree with the idea that small banks better represent that health of the US economy.  Most small an medium-sized businesses rely on small banks.  Growth in employment relies on small and medium-sized businesses,...
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