Monday, October 8, 2018
One reason that diversification across time is a bad idea for young people is simple math. If a market crash takes half your life savings, the market will have to double in order to make up your losses. That may take five years, but then you’re only back where you started and have missed five years of potential gains. The math looks bad.
Few investors would buy a $300,000 house and not buy insurance on it against fire, flood, tornados or hurricanes. A few more might go without insurance on a $100,000 BMW, but not many. Consider that the odds of a bear market in stocks that steals say 25% of your savings are far greater than your house burning down or totaling your BMW. Bear markets happen every decade. So why not insure your investment in the stock market as you would your house or car?
Tuesday, October 2, 2018
The left continues to prop up the idea that the state is the fount of all blessings. Mariana Mazzucato, Professor of the Economics of Innovation and Public Value and Director of the Institute for Innovation and Public Purpose at University College London, wrote recently that western economies are failing because the people have hobbled the state:
Still, George Packer, a staff writer at the New Yorker magazine since 2003, thinks he knows more than the LSE academics. He wrote the following in the August 27 print issue:
It was caused by reckless lending practices, Wall Street greed, outright fraud, lax government oversight in the George W. Bush years, and deregulation of the financial sector in the Bill Clinton years. The deepest source, going back decades, was rising inequality. In good times and bad, no matter which party held power, the squeezed middle class sank ever further into debt...
In February, 2009, with the economy losing seven hundred thousand jobs a month, Congress passed a stimulus bill—a nearly trillion-dollar package of tax cuts, aid to states, and infrastructure spending, considered essential by economists of every persuasion—with the support of just three Republican senators and not a single Republican member of the House.Typically, journalists will defer to an expert on matters in which they aren’t trained, which is most subjects. But Packer didn’t bother to ask an economist as the Queen did. Had he done so, he would have received the same answer from mainstream economists – recessions are random events and can’t be predicted. If economists knew the causes of recessions they could predict them when they see the causes present.
EU aims to abolish planned obsolescence,” they have banned the practice before they identified what it is.
The European Parliament now wants the European Commission to create a clear definition of the term “planned obsolescence" and to develop a system to track that aging process. It also wants longer warranty periods and criteria to measure a product’s strength. Each and every device should also have a mention of its minimal life expectancy.
Devices should also be easier to repair: batteries and other components should be freely accessible for replacement, unless safety dictates otherwise. Manufacturers will also need to give other companies access to their components so that consumers can visit those companies for repairs.
The resolution should prevent situations like Samsung’s Galaxy Note 7 fiasco. The battery proved to be an explosion hazard and seeing how it could not be replaced, the South Korean company was forced to recall every single device.
The European Parliament also hopes the resolution will also stimulate job creation, because it should result in more independent repair services. The second-hand market should also benefit from the resolution, because products will get a new lease on life.
When a writer calls something BS, he usually means it’s not only worthless but a nuisance. However, I have learned that BS in one person’s eyes is gold in another’s. For example, a club in Ft. Worth used to sell cow patties covered in polyurethane with a tiny cowboy wearing snow skies perched on top and a label that read “Ski Texas!” Many businesses sell cow manure compost for millions of dollars every year.
Still, a few academics want to advertise their arrogance by giving themselves the authority to declare some jobs as BS:
David Graeber of the London School of Economics argues that as much as 30% of all work is performed in “bullsh*t jobs,” which are unnecessary to produce truly valuable goods and services but arise from competition for income and status...
Numerous jobs fall into that category: cyber criminals and the cyber experts employed by companies to repel their attacks; lawyers (both personal and corporate); much of financial trading and asset management; tax accountants and revenue officials; advertising and marketing to build brand X at the expense of brand Y; rival policy campaigners and think tanks; even teachers seeking to ensure that their students achieve the higher relative grades that underpin future success.
Tuesday, August 14, 2018
The administration wants China to quit violating our copyright and patent laws, stop stealing our technology and forcing companies doing business in China to share technology. But what does that have to do with a trade deficit? We buy mostly consumer goods from China that are made using low tech, labor intensive processes. And why would we expect China to enforce our laws? Anyway, all countries since World War II have grown by importing better technology from the West. Japan was first. We should want that to happen so their people can grow out of poverty.
Some have accused China of being a currency manipulator, meaning that they keep their yuan artificially low in exchange for the US dollar so that their products are cheaper for Americans. That may have been true in the past but China has allowed its currency to float on the market for years and it has still drifted lower. Besides, no country in the world manipulates its currency the ways the Fed does the US dollar.
Every now and then the world is visited by one of these delusive seasons, when “the credit system” as it is called, expands to full luxuriance; everybody trusts everybody; a bad debt is a thing unheard of; the broad way to certain and sudden wealth lies plain and open; and men are tempted to dash forward boldly, from the facility of borrowing.