Worth Reading

Worth ReadingHere’s a piece that I haven’t seen linked at my favorite aggregation sites that I think is interesting and worth the time in that it challenges conventional economic wisdom. I offer a snippet below in order to try to whet your appetite.

[G]iven its direct and indirect influence on policy making and for reasons of democratic accountability, economics should become much more aware of the values it (implicitly or explicitly) endorses. Those values are embedded in some of the basis concepts used but also in some of the assumptions in the theory-building.

The textbook example in the philosophy of economics literature to illustrate the insufficiently acknowledged value-ladenness of economics is the notion of Pareto efficiency, also known as ‘the Pareto criterion’. Yet time and time again (for me most recently two days ago at a seminar in Oxford) I encounter economists (scholars or students) who fail to see why endorsing Pareto efficiency is not value-neutral, or why there are good reasons why one would not endorse the Pareto-criterion.

I encourage you to read the entire article.

Economics as a moral science


Worth Reading

Worth ReadingThis piece by Justin Fox is among the best I’ve read recently. I highlight it not just because it is very good, but also because I don’t recall having seen it at my usual aggregation sites. All of it is well worth your time. A taste follows.

What is all this research teaching us? Mainly that financial markets are prone to instability. This instability is inherent in assessing an uncertain future, and isn’t necessarily a bad thing in itself. But when paired with lots of debt, it can lead to grave economic pain.

We all tend to forget — once the crisis du jour has passed and the raging bull reappears — that the markets are inherently unstable. Hedging risk is never a bad idea.

It is also worth being reminded (thanks, Justin) of the now-famous Raghuram Rajan presentation at the 2005 Federal Reserve Bank of Kansas City’s annual Jackson Hole conference. Rajan, a longtime University of Chicago finance professor who was then serving a stint as director of research at the International Monetary Fund and is now the head of India’s central bank, carefully warned that the world’s vastly expanded financial markets, though they have brought many benefits, might be bringing huge risks as well.

What We’ve Learned from the Financial Crisis


Worth Reading

Worth ReadingAs regular readers are well aware, I don’t frequently offer links to articles, largely because there are others who do it so well (such as Joe Calhoun for Real Clear Markets, Tadas Viskanta for Abnormal ReturnsBarry Ritholtz and Josh Brown, among others). But there are four pieces that I want to highlight today, particularly in light of my recent work on the so-called “Yale Model” of investing (see here, here and here).

I also want to commend Michael Mauboussin’s fine offering on outcome bias which, coincidently, came out the same day I wrote about it (much less comprehensively). It should be read along with his excellent book, The Success Equation, which I also heartily recommend.

Happy reading.

Invest Like Buffett

Worth ReadingLarry Swedroe thought he was done writing books.  After having written a bunch of them, he was comfortable that he had said what he wanted to say.  Moreover, he still had his blog at CBS News MarketWatch as an outlet.  However, as he explained to me yesterday, he came to see that while he had pretty much said what he wanted to say, he hadn’t always been heard and hadn’t always said what he wanted to get across in such a way as to ensure a maximum hearing.  That realization led to the writing of his newest book, Think, Act, and Invest Like Warren Buffett: The Winning Strategy to Help You Achieve Your Financial and Life Goals. Continue reading

Warren Buffett’s Investment Checklist

While I hold Warren Buffett in high esteem, I think that his general deification tends to be a bit much.  But even so, this list of his investment criteria is simple, more than a bit obvious, and terrific.  It’s a classic back to basics review.  I suggest you read it.  It even made The New Yorker‘s The Hundred Best Lists of All Time at #24.  It was behind the periodic table, the Bill of Rights and the Ten Commandments though.

Warren Buffett’s Investment Checklist

My Top Posts for 2012

The following dozen Above the Market posts were read, quoted and linked the most during 2012 and are listed below in order of popularity.  I think they provide a pretty good cross-section of this site and what I am about.  I trust that you will enjoy each of them again or enjoy them afresh if you may have missed them the first time around.  I am most appreciative of all the attention and support I have received.  Thank you all very much.

My Fine Fifteen

I resist “best of” lists both because I have my own (better!) tastes and because I have my own needs, outlooks and preferences.  I also cannot claim to have read or seen anything like everything that might be relevant to the topic.  So instead of claiming that these are the best, the following are my fine fifteen — the financial websites and blogs I used the most and found the most indispensable during 2012.

Your mileage may vary. 

  • The Monoliths. There are lots of (probably too many) huge and would-be comprehensive sites focusing on the financial world.  My favorites are AdvisorOne, which is geared toward retail advisors and other professionals and The Wall Street Journal’s MarketWatch, which is more focused on the markets.
  • The Aggregators. Having reliable sources to sift through everything and point me to what I need to read is absolutely crucial to my day.  For my money, the best are Tadas Viskanta’s Abnormal Returns and Real Clear Markets.  Tadas focuses on the blogosphere and is especially good at finding terrific stuff I wouldn’t otherwise have seen, often from new and off-the-beaten-path voices.  Real Clear does some of that while providing must-reads from traditional journalistic sources.
  • The Commentariate: Lots of people comment a lot on the markets and our industry.  In my view, three stand out above the crowd: Barry Ritholtz’s The Big Picture, Josh Brown’s The Reformed Broker and Cullen Roche’s Pragmatic Capitalism.  Each is prolific as well as insightful and each has a powerful and unique voice.  If you don’t read them every day already, what are you waiting for?
  • The SpecialistsDoug Short‘s market analysis and charts are invaluable.  For eclectic, data-based takes on politics and finance, Political Calculations is a must-read. Michael Kitces is the best financial planner I know and his blog is terrific. Tom Brakke is the best investment analyst I know and his blog (in three parts) is terrific.  For retirement planning, Wade Pfau’s Retirement Researcher Blog is unbeatable. Rick Ferri is my go-to on indexing.  Mark Buchanan’s The Physics of Finance is a brilliant look at economics and finance through the lens of physics.  Ed Yardeni’s Dr. Ed’s Blog is fabulous for investment strategy.

I have missed many excellent and valuable resources, of course.  I should particularly note StockTwits, which is my “home base” for dealing with the markets and seeing who’s who and what’s what.  I’d be happy for you to point out my errors and omissions, in excruciating detail if necessary.

Worth Reading

I commend some recent articles to your attention.

Worth Reading

I commend some recent articles to your attention.

Worth Reading

I commend some recent articles to your attention.