10 Monday AM Reads

Back to the workweek! Spring has sprung, the futures are green, and its time for our morning train reads:

• Why are interest rates so low?  (Ben S. Bernanke Blog)
• How to Combine Value and Momentum Investing Strategies (Alpha Architectbut see Woe Betide the Value Investor (Research Affiliates)
• Confusing today’s liquidity with tomorrow’s (TRB)
• How the world’s youngest self-made female billionaire is shaking up the healthcare industry (Business Insider)
• Economic Confidence Shows Euro-Area Recovery Defies Greek Risks (Bloomberg) see also German Economy Finds New Fuel as It Reaps Benefits of QE (Bloomberg)

Continues here



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Discussions found on the web:
  1. VennData commented on Mar 30

    Tore up my pools. Boycotting the Final Four.

    If you want to live in a discriminatory nation, keep on voting for the Republicans.


  2. DeDude commented on Mar 30

    It is a really important question Josh is raising at TRB. What happens to the bond ETF’s if everybody want to sell and nobody want to purchase. Is it the same or different from what happens when everybody want to sell the underlying bonds (or traditional bond funds) – or do the ETF’s carry more risk. In a hyper-sell environment could the ETF’s end up losing value much faster than the underlying bonds in their index – and if so who would take that loss?

    • rd commented on Mar 30

      The ETFs trade like stocks. As Warren Buffet likes to say, Coke didn’t lose 25% of its value in a day even though the stock price did. An ETF price is whatever somebody wants to pay for it. It doesn’t have to be related to the actual NAV, unlike a mutual bond fund invested in liquid assets, like Treasuries. However, some bond funds and ETFs own relatively illiquid bonds where the listed NAVs may or may not accurately reflect the actual market value. There have been lawsuits and SEC investigations over this in the past.

    • VennData commented on Mar 30

      Bring it on.

      I’ll be buying.

  3. Jojo commented on Mar 30

    Ways to harness your brain power & change your life
    February 27, 2015
    John Brown

    Between psychology, medical science and neuroscience, we have never known so much about the human mind. Recently I’ve been amazed at the number and quality of studies which are showing us the amount of pure power our brains have; powers that are truly amazing. Powers that change the meaning of the old phrase, “put your mind to it.”

    Here are a few of my favorite discoveries of what our brains can do:

    Build muscles and increase your metabolism: In a study by Ranganathan, et al., 2004 a group of people who listened to guided imagery of themselves going through a strength training work-out built almost as much muscle mass as people who actually did the work-outs. Scientists think that the mental process of imagining a work-out releases the same hormones to build muscle that are released during an actual exercise session.



  4. rd commented on Mar 30

    DeLong takes on the monetarists: http://www.marketwatch.com/story/what-friedman-got-wrong-about-the-great-depression-cost-us-during-the-great-recession-2015-03-30

    As an engineer, I have always been baffled by how macro-economic schools of thought always seem to operate in a vacuum from other schools of thought. As a result, each economic theory operates the way high-school Newtonian physics works on earth – overlooking friction from air, solid-to-solid contact etc. As a result, it doesn’t work pretty well by itself for our day to day stuff without lots of little “factors” to account for real-world-influences. It works well once you are in space though!

    It has always seemed to me that both Friedman and Keynes did a great job explaining their parts of the jig-saw puzzle. People like Minsky also seem to have provided useful input. However, holding three thoughts in your head is much more difficult than just holding one simple one.

  5. Crocodile Chuck commented on Mar 30

    Re: Theranos

    A ‘billionaire’, huh?

    “For all of her practice at presentation, Holmes still sometimes has an engineer’s difficulty in clearly articulating how Theranos will advance the cause of preventive medicine,” observes The New Yorker’s Ken Auletta in his profile”

    If I’m standing before you fifty pounds overweight with a pot belly, why do I need a blood test to determine if I have diabetes?

    • willid3 commented on Mar 30

      probably because those dont indicate being diabetic? its little more involved than that

    • Jojo commented on Mar 30

      You cannot be serious! Whew…

      She is revolutionizing the multi-billion $$ blood testing industry (and by extension, all the people that take a cut out of the markup for blood testing).

      Look up the prices for the tests that Walgreens is charging through her service. They are significantly lower than anyone else. And she only needs a relatively small amount of blood to do all of their tests, compared to the current requirements of vials and vials and vials.

  6. rd commented on Mar 30

    Amazon (and other) non-compete clauses for low-paid, low-skill workers: http://www.theverge.com/2015/3/26/8280309/amazon-warehouse-jobs-exclusive-noncompete-contracts

    This is a truly bizarre approach to employment. It is unlikely to be enforceable in many jurisdictions, but who wants to have to spend their life in courts just to change jobs? When the pendulum swings back in the labor markets (which it inevitably does), it is likely that many workers will have long memories about this type of treatment and hiring could become difficult right when the company wants it the most.

    • willid3 commented on Mar 30

      well the legislature is in session for their standard 6 month term every 2 years. so even if they dont get it right, the next legislature will have to take care of it (just like the current one did). so even if the state is constitutionally mandated to have a balanced budget, its not really all that. besides we have to have all of those national guard and state police standing guard over the border. course that has had some impacts states wide as their are less state police in other parts of the state (seems they just pull from different parts of the state for border guards on a rotation). besides the politicians set the budget based on what other politcians ‘calculate’ (guess) what the taxes will be. and the politicians belong to the same party so you can guess there isnt really much of a disagreement as to what that number is . course thats been a feature of the state for a long time. we have had one party rule (they just changed the name of the party they belonged to. governor hair doo was originally a democrat until he became a republican).

  7. VennData commented on Mar 30

    Russia has a sweatshop full of paid internet trolls who spread propaganda in 12-hour shifts


    Zis eez lie.

    Many filthy capitalist Russia-containing pigs no work at good jobs and right lies, many lies. Look at Koch Brothers! Look at many emailings coming in large font, with pretty colors from your dear sweet grandma babushka who is someone you trust more than Obama or Bush or Cllnton, No? I ask? Kerry? Sinister leader NATO Jens Stoltenberg?

    Look Putin is wonderful guy. Eez hardworking man of people has 80-90 percent approval here at home… er… In Russia I hear from many friends I visit on frequent basis with long blond hair and large breasts. So long comrade. Peace.

  8. Robert M commented on Mar 30

    The FED and all the other economist can not seem to understand that they are their Sherlock Holmes moment; No matter how improbable when you have eliminated all the other facts the truth remains. Wage growth in the US is down because technology, being lean, wage & benefit costs, et al make the 55 yr worker almost unhireable. Those that do receive less in wages and benefits. The result then is a group that is most likely asset rich(though if in the wrong spot not even that) and cash poor facing harsh demands on their wages. As such they are not going back to the theatre or many social events that cost a cash outlay because they are saving that money. So the next time someone says we are not doing as well as the peak of 2007 realize it is not going to happen for the current largest cohort of Americans.

  9. Robert M commented on Mar 30

    “Consumer purchases rose less than projected in February, indicating the biggest part of the U.S. economy will find it hard to sustain momentum after the best quarter since 2006. Adjusted for inflation, spending declined for the first time in almost a year. Incomes climbed 0.4 percent in February for a second month, propelled by a jump in dividends. ”
    The killer in this statement is that when the income gains are coming from dividends it is coming from the group that spends the least relative to its income yet the author sees no dichotomy in his reporting

  10. farmera1 commented on Mar 30

    What happens when Vanguard owns everything????


    Vanguard’s growth has been amazing. People are finally figuring out that costs matter, and Vanguard is the best at low costs in most cases. Asked the dude I know from Vanguard how they were doing managing all of that new money. His response wasn’t too reassuring, just a nervous laugh. This kind of growth makes me nervous. As a long term customer, I really wonder what the future holds for Vanguard. I liked it a lot better when people ignored me when I told them to look at Vanguard and costs matter. Now they all seem to have figured it out and Vanguard is growing like crazy. Maybe Vanguard is growing too


    ADMIN: This was in our morning reads last week

  11. willid3 commented on Mar 30

    i always figured that even if the FED had set the bench mark rate higher than it should be, that either there would be less demand for money (which seems to have been the case. after the bubble, consumers have been debt averse, and business, lacking buyers, has also been debt averse. with one exception, buying stock. which of course helped keep stock prices up). if you set rates too low, there would have been more demand for money. but there hasnt been

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