10 Wednesday AM Reads

Wakey wakey, time to shake & bakey. Your morning after the rout the day before train reads:

• Most Downloaded SSRN Paper Ever Is All About Market Timing – and it suggests investors should currently be in cash (Bloomberg)
• How Much Diversification is Necessary? (A Wealth of Common Sensesee also The economics of the stock market is simple really: buy and hold (The Independent)
• I Can’t Define Short-Term Silliness but, Like Justice Stewart, I Know It When I See It (AQRbut see 5 Forces Driving the Global Stock Selloff (Moneybeat)
• Economics Has Math Problem (BV)
• Lessons from Dunning-Kruger (NeuroLogica)

Continues here


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    • Iamthe50percent commented on Sep 2

      How do you know that GM isn’t already giving it to the NSA, like AT&T?

    • rd commented on Sep 2

      Actually, I think OnStar is run through AT&T so it is probably already shared with NSA, including the WiFi feed.

    • willid3 commented on Sep 2

      well see, Onstar is already shared by AT&T. GM doesnt have to do any thing. now that we have that out of the way, the same can be said for any of the similar offerings from the car companies? and then there is satellite radio? its all just part of our inter connected world of today, only it will keep getting more so.

      consider if they states add a radio tag your license plates, then they could just add a reader to traffic signs, and then they would know whee we go. and could sell that to the highest bidder

    • rd commented on Sep 2


      I think you would be astonished how often your license plate gets read and checked by police, meter maids, toll booths, traffic cameras etc. They already know where your car has been going. Getting a court order for your cell phone location just adds to it.

    • Iamthe50percent commented on Sep 2

      willid3, I’m a GM customer. I last had a Ford (used) in the early ’80s, so I only know Onstar, I’m not surprised the others have something similar.

      rd, you are mistaken. I would not be astonished at all. I was an embedded systems programmer before Indian H1-B’s destroyed the job market. Now I’m a retired blue collar worker, just like I was born in ’40s. I’m not complaining, at least I had a skill (auto mechanics) that was a hobby that I turned into a vocation. Most of my middle class compatriots had nothing to fall back on. It’s sad when a talented forty year old has to move back in with his parents as perpetually unemployed. BTW, 40 is too old according to hiring managers.

    • VennData commented on Sep 2

      I’m all for it. Driving is a privilege.

      If you happen to shoot a cop or meet up for shawarma with a known terrorist I hope that data goes directly to the authorities.

      The other trillion bytes a minute they receive can get tossed in five years.

    • rd commented on Sep 2

      You completely misunderstand.

      Publishing reports is just more big government activity. Not publishing reports is a cornerstone to cutting costs and achieving lean, efficient government that will drive future growth.

      Besides the 10-yr growth numbers look fine. The threat of Brownback running for governor had forced Democrats into doing many of pro-growth things, so the credit really should go to the Republicans. So taking credit for the 10-year growth is a completely appropriate thing for the governor to do.

    • willid3 commented on Sep 2

      but then why hide this success story? course cutting any and all economic reports is just good government, if business wants those it should fund it right? after all, the rest of us dont get any benefit from it

    • Low Budget Dave commented on Sep 2

      I can’t tell if you are being sarcastic or not. But you are saying that getting rid of performance measures is a mark of efficient government? Because there are things called “facts” that say otherwise.

      Are you saying that when Kathleen Sebelius vetoed the Republican budget cuts to education, the Republicans should be able to take credit for that? Because words actually have meaning, and the way you are putting these words together does not.

    • willid3 commented on Sep 2

      i strongly suspect suspect they were being sarcastic. but we have seen some moves by conservative senators and reps to do just that, eliminate reports.

      that was likened by some of us as driving a car without a windshield to see what was in front of us.

    • VennData commented on Sep 2

      I vote sarcastic.

      But the House might hold it up, or shut down government, or Mitch McConnell will whine that the Senate can’t do anything about it.

    • rd commented on Sep 2

      I vote sarcastic. I do find it amusing that it is difficult for people to separate sarcasm from actual beliefs these days. More and more frequently, it is impossible to distinguish headlines in The Onion from other news sources and SNL has been able to do shows using actual debate transcripts.

    • DeDude commented on Sep 2

      You see if there are 500 parameters relevant for the “health” of the economy (and re-election of the GOPster) then you simply publish those that are showing good progress (and forget the rest). You know we are screwed when they don’t want to publish anything.

  1. soulmatic09 commented on Sep 2

    “The Most Downloaded SSRN Paper Ever Is All About Market Timing”

    “Faber’s approach does not, for practical reasons, take into account such things as taxes and commissions”

    Hmm. Since when is taking taxes and commissions into account impractical?

    His whole approach is a non-starter if this is a base assumption in his model.

    • rd commented on Sep 2

      Taxes are irrelevant in tax-deferred accounts such as 401ks and IRAs. Similarly, commissions are irrelevant in the same accounts if they are in mutual funds that allow transfers without costs. Since the switches are infrequent, you would be unlikely to be hit with frequent trader fees at shops like Vanguard.

    • rd commented on Sep 2

      I think one of the solutions being proposed is to lift the ban on oil exports so that we can ship it to Third World countries where they can use refineries with the latest technologies to crack it and produce gasoline, diesel etc. to sell back to us. That is how we will create jobs in the US.

    • DeDude commented on Sep 2

      Well there are certainly people who would get depressed.

  2. RW commented on Sep 2

    Washington Post Ed Board: Federal Reserve Board Cultists

    …the Washington Post editorial board and the Federal Reserve Board Cultists …adhere to a bizarre belief that the 19 members (12 voting) of the Federal Reserve Board’s Open Market Committee (FOMC) live in a rarefied space where the narrow economic concerns of specific interest groups don’t impinge on their thinking. …

    Those of us who live in the reality-based community know that the Fed is hugely responsive to the interests of the financial sector. …

    The net effect …is that the Fed tends to be far more concerned about the inflation part of its mandate rather than the high employment part, even though under the law the two goals are symmetric. …

    There is very little basis in economic research for maintaining that a stable 3.0 inflation rate is more costly to the country than having 1 million people being needlessly unemployed, but the view coming from the Fed is that the former is much worse than the latter.

    NB: The WaPo editorial board is manifestly incompetent (or at least hopelessly tendentious) in many areas including economics but something does seem to happen even to otherwise competent economic thinkers when they interact closely with or join an institution like the Fed; something like the Borg mind perhaps.

    • RW commented on Sep 2

      And speaking of the Fed, our host has commented more than once on the foolishness of focusing on one month’s tally in a number of data series including jobs, but it’s even worse than that particularly if you’re actually linking a major policy decision to it

      Standard rant on standard errors

      The confidence interval for the monthly change in payrolls is plus or minus 105,000 jobs. Let’s say we get another on-trend report of 220K net jobs added in August. The 90-percent confidence interval on that change ranges from 115K to 325K, i.e., there’s a 90-percent chance that the true August change is within this interval. Think a bit about how these different extremes would change the discussion on Friday.

  3. VennData commented on Sep 2

    America: where we investigate people marrying in to get citizenship, but regale the corporation “job creators” who leave the country to shirk their fair share of military, Social security and Medicare.

  4. rd commented on Sep 2

    Building employee morale, one layoff and out-sourced job re-application at a time:


    Welcome to the real world of job security. I have never held a job where I would expect the company to offer me 1 week of pay for each year of employment. Generally it ranges from a minimum of two weeks to a max of about four weeks for long-term employees. You don’t stick around long though if you think your workload is in jeopardy, so the staff “self lays off” much of the time.

    • willid3 commented on Sep 2

      thats pretty much how the outsourcing game is run. employees are pretty much toast today since they are all competing on cost, not what they can do.course the customers is driven into this to cut cost, but unless they put it the contract, there may or may not be a price to out sourcer for poor performance, which pretty much guarantees there will bad performance. it used to be ‘normal’ in a layoff to offer a week per year of employment. and customers might not be all that unhappy if performance is bad, because there could be penalties paid to them.

      and if they doing this just so they can have over head functions (hr etc) then maybe they need to out source those themselves?

      i suppose HP is looking at some of these contracts and deciding if they are profitable or not. if they arent, then they decide if its worth it to pay early termination fees . course they could be really sneaky and make it so that the customer wants to end it

      i for one am happy i was able to escape that madness.
      but its a lot harder cause prospective employers may not want you because of a bad previous experience with out sourcing.

  5. rd commented on Sep 2

    Wait a second….FDIC chief says banks may be “caught out” if interest rates rise. Say what? This would be the most telegraphed interest rate rise in history and from 0% levels (unlikely to go lower, more likely to go up). If any banks run into problems because the Fed raises rates 0.25% or so, then the bank’s senior management and board should be fired on the spot.


    • VennData commented on Sep 2

      Remember when Obama ended the years and years of Bush’s “temporary” tax cuts?

      One of the right winger’s arguments was they “…weren’t ready…” plus other gems:

      “…These Bush tax cuts did not explode the deficit, as Obama and his echo chamber have alleged…”


      But my favorite is: “…The proof is in the pudding over the Bush tax cuts. They were followed by a record 52 straight months of job creation,..”

      Wait, I thought government didn’t create jobs.

      More GOP ‘silo arguments,’ one ‘philosophy’ for this argument, another one ‘philosophy’ for another.

    • willid3 commented on Sep 2

      well you know they get paid the same either way, just their bonus might be smaller

  6. RW commented on Sep 2

    A question to which (just about) everyone knows the answer can still be a good question.

    Corbyn, QE and financial interests

    If QE was the only means of stabilizing the economy in a liquidity trap, because fiscal policy was out of bounds for political reasons, then so be it. The social benefits would far outweigh any distributional costs, even if the latter could not be undone elsewhere. But if QE is a highly ineffective instrument, and there are better instruments available, you have to ask in whose interest is it that we stick with QE?

    • rd commented on Sep 2

      Its the only tool the Fed has had to bring to bear and everyone else (hello Congress?) has been AWOL. At least Bernanke had the balls to try doing something.

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