What We Didn’t Learn From the Bear Stearns Collapse Sifting though the conventional wisdom 10 years later. Bloomberg, March 19, 2018 This weekend marked the 10th anniversary of the collapse of Bear Stearns Cos. The proximate cause of the disaster was a combination of excessive, subprime mortgage-concentrated leverage and poor risk controls. But… Read More The post Lessons Learned – or Not – From Bear Stearns appeared first on The Big Picture.
How to Know When a Company Represents a Paradigm Shift Think of the difference between evolution and revolution. Bloomberg, March 14, 2018. Thomas Kuhn, the American physicist and philosopher, is perhaps best known to the public for the phrase “paradigm shift.” In his book “The Structure of Scientific Revolutions,” he describes the… Read More The post Winning by Changing the Rules of Business appeared first on The Big Picture.
Share Buybacks Work Better in Theory Than in Practice The main problem is that effects of bad decision-making don’t become clear until much later. Bloomberg, March 12, 2018 The Corporate Finance Institute says stocks buybacks are a “win-win situation for both companies and shareholders.” Some members of the CFA Institute, which publishes the Financial Analysts Journal, take a… Read More The post Buybacks Are Great in Theory, Less So IRL appeared first on The Big Picture.
Pick Another Day to Celebrate the Bull Market’s Birthday Yes, the lows were on this day in March 2009. But the next four years were just the recovery from a huge collapse. Bloomberg, March 9, 2018 On this day in 2009, the major stock-market indexes closed at lows not seen in more than a… Read More The post Bull Markets Can’t Start Until Bear Markets End appeared first on The Big Picture.
CEO Pay Rewards What Was Going to Happen Anyway Shares rise — and fall — almost regardless of the actions of top executives. Bloomberg, March 8, 2018 Compensation in all its excesses for top corporate executives is a hardy perennial for astonishment, outrage and fruitless demands for reform. I have said more than once… Read More The post A Closer Look at CEO Pay appeared first on The Big Picture.
What Happens When Business and Politics Mix? If a decision expands the potential customer base, the result can be positive. Bloomberg, March 6, 2018 I have long cautioned readers about the dangers of mixing politics with their investing. Politics is so emotional, so tribal, that it can easily cloud an investor’s thinking. Anything interfering… Read More The post Dangers of Mixing Business with Politics appeared first on The Big Picture.
Monopolies Alone Don’t Explain Why Stocks Soar There are many reasons share prices can outpace U.S. economic growth. Bloomberg, February 23, 2018 Is America becoming a nation of price-fixing, monopolistic rent extractors? That is the question raised recently in a working paper by a trio of researchers at Brown University. This question is also working its way… Read More The post Nation of Rentiers? appeared first on The Big Picture.
Small-Business Sentiment Is No Help to Investors Surveys of how entrepreneurs are feeling have proven to be of little value. Bloomberg, February 21, 2018. President Donald Trump took a brief break from tweeting about Russian electoral interference (“No Collusion!”), #MeToo (Fake News!) and gun violence (Very Sad!) to tweet about small-business optimism. This… Read More The post Small Business Sentiment is Noisy, Unhelpful appeared first on The Big Picture.
One Question Investors Should Ask Now and Then The answer might reveal flaws in your thought processes. Bloomberg, February 16, 2018 How committed are you to a belief system? Answering that question has the potential to reveal flaws in our thought processes about many things, from politics to economics to cultural issues. Whether… Read More The post Updating Your Beliefs When Faced with Contrary Evidence appeared first on The Big Picture.
Hedge-Fund Mediocrity Is the Best Magic Trick Never have so many investors paid so much for such uninspiring returns. Bloomberg, February 15, 2018 Hedge funds have accumulated $3 trillion, with a substantial portion of it coming from public pensions. That these funds don’t deliver outperformance is almost beside the point. What they… Read More The post Hedge Fund Expected Returns Are Fabricated Sales Tools appeared first on The Big Picture.
Trump’s Huge Infrastructure Plan Is a Flop It doesn’t come close to spending enough to fix the nation’s roads, bridges and tunnels. Bloomberg, February 13, 2018 I’m a sucker. I admit it. One of my failings is believing people who firmly shake my hand while looking me squarely in the eye. Indeed,… Read More The post Trump’s Infrastructure Plan is DOA appeared first on The Big Picture.
People Get Creative When Explaining the Market Correction There are some great stories being told now, all with crystal-clear hindsight. Bloomberg, February 9, 2018 One of the more fascinating aspects about people and markets is how uncertain we are about what will happen next, yet so cocksure in our explanations of what… Read More The post Congratulations: It’s a Correction! appeared first on The Big Picture.
5 Rules to Help Avoid Investing Disaster It’s actually not that hard. Bloomberg, February 8, 2018. A basic rule of life is to avoid being a guinea pig in other people’s experiments. This is an inviolable rule of technology: consumers should always leave 1.0 of anything to the early adopters. All car fanatics know that any… Read More The post Terminated: Volatility Products Blow Up appeared first on The Big Picture.
The Signs of a Market Blip or Something Worse The bulls probably still rule, but volatility is back and so are ups and downs. Bloomberg, February 5, 2018, 9:28am The market sell-off that started last week has made investors nervous. A quick skim of the headlines reflects fears that the bull market is… Read More The post Tops & Bottoms appeared first on The Big Picture.
Millennials Are Out of the Basement and Into Buying Homes Young adults are getting jobs, forming households and having kids. It all adds up. Bloomberg, February 2, 2018 There are two themes I find endlessly fascinating about real estate. One is its enormous role in the financial crisis. 1 The other is the steep decline… Read More The post Good news! Home Ownership Has Bottomed appeared first on The Big Picture.
The Odds of Fixing U.S. Infrastructure Just Got Better The U.S. Chamber of Commerce now is calling for higher gas taxes to repair America’s crumbling roads. Bloomberg, January 31, 2018, 12:13 PM EST After all the complaints I have made about the need for a big improvement in American infrastructure, I am genuinely excited by… Read More The post Why We Might Get an Infrastructure Deal appeared first on The Big Picture.
Why Markets Love Trump’s Tax Cuts Put aside partisan feelings and recognize that the economy is getting a major stimulus. Bloomberg, January 29, 2018 It has barely been a month since the Tax Cuts and Jobs Act of 2017 passed. Despite a volley of criticism over the bill, Mr. Market has voted with his feet.… Read More The post Trillion and a Half Dollar Party appeared first on The Big Picture.
Three Ideas for How Apple Should Use All That Cash The company is great, yes, but it can’t let so much money sit idle. Bloomberg, January 26, 2018 Back in November 2017, I suggested that Apple Inc. should use some of its immense cash stockpile to buy rather than build its video library and streaming… Read More The post Apple’s Cash Hoard Keeps Growing appeared first on The Big Picture.
Hedge Funds Had a Good Year, Just Not Good Enough And yet an industry with high fees and ho-hum performance continues to thrive. Bloomberg, January 12, 2018 Attention hedge-fund investors: I have some good news for you. I also have some not so good news. The good news is that 2017 saw… Read More The post Good News / Bad News for Hedge-Fund Investors appeared first on The Big Picture.
Betting Against Trump Was a Market-Beater The companies the president disparaged have done much better than those he favored. Bloomberg, January 10, 2018 Remember when President Donald Trump would call out a company by name, causing its stock price to gyrate madly, whacking a few billions off its market value with just one offhanded… Read More The post Revisiting the Trump Portfolios appeared first on The Big Picture.