10 Wednesday AM Reads

Midweek, and the news-flow continues apace. It is our privilege to bring you the finest custom morning train reads in the land:

• What Happens When Vanguard Owns Everything? The company is bigger than an 800-pound gorilla–and still growing. (Morningstar)
• Old Age Doesn’t Kill Bull Markets (Dr. Ed Yardeni)
• The Billion Prices Project Thinks Inflation May Have Turned a Sharp Corner  (Real Time Economicssee also The Inflation Cycle May Have Turned (Real Time Economics)
• LOL: Should you invest with a high school hedge fund manager? (Quora)
• Five Charts Show Europe’s Economy Is All Right (Bloomberg View)

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  1. RW commented on Mar 25

    Brad DeLong rants on one of my own pet peeves.

    A Rant Against the Use of the Word “Bubble” in the Context of the Bond Market

    When we call something a “bubble” we attach a number of meaning-tags to it. Here are three:

    1. Bubbles are collective irrationality.

    2. Bubbles pop.

    3. Owning bubbly assets entails large long- and fat-tailed risks.

    …I think clearer thought is obtained by eschewing applying the word “bubble” the bond market. Call them extremely richly-valued. Call them low return. Call them risky for those without the option to hold them to maturity. But if you have to use the word “bubble” apply it to other things.

  2. VennData commented on Mar 25

    As Vanguard buys more, the lamer financial types will be forced out of the market, leaving room for only the best, which will make the market more efficient. Those “best” will still be graded on the same curve making it all the harder for the ‘better” securities fund managers to be “better.”

    Turn the question on it’s head. What would happen if Vanguard gave the shares they hold on behalf of their owners?

    We would have to trade, find people who would trade, or move to higher cost, lower performing platforms.

    Vanguard is good for the American financial markets.

    • intlacct commented on Mar 25

      Yet another article that fails to see that it was the obliteration of the conflict of interest between the fund management company and shareholders that is Vanguard’s ultimate uniqueness. One needs to know when one has enough.

      I would compare Bogle to the Founding Fathers (who else when his classic is titled, Common Sense on Mutual Funds? Even the fund name is from that period) – schooled in the classics (a million great stories and quotes from timeless sources – he’s even in a reading list with Homer! http://elliotmcgucken.com/ ), offered unlimited wealth and power (imagine VG a la T Rowe Price and publicly traded), but returns like Cincinnatus to his soil (investor advocacy).

      Vanguard may be the ultimate argument against a Gresham’s dynamic in investing. They are actually driving the entire system to behave more responsibly.

  3. RW commented on Mar 25

    The WaPo appears to be in the business of misleading its readers.

    The Economy, Like Arithmetic, Is Not Complicated; Even If Robert Samuelson Does Not Understand It

    Robert Samuelson …gets it badly wrong about the economy again. He began his Monday column by telling readers:

    “The Federal Reserve is at a crossroads, and it doesn’t know where it’s going.”

    Really? The Fed doesn’t know where it’s going? How about Robert Samuelson doesn’t know where it’s going?

    It gets worse: ….

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