Economic Analysis

International Inflation Cycles Sync Up

Outside the Box

May 24, 2017

My friend Lakshman Achuthan, Co-Founder & Chief Operations Officer of the Economic Cycle Research Institute (ECRI), has done some really interesting work on international inflation cycles, and in today’s Outside the Box he shares it with us. This is a special treat – ECRI does not normally make its material available outside of its client base. I am truly grateful that he allows me to share this. Lakshman will be joining us at SIC this week in Orlando, to the great benefit of the attendees.

It...

The Great Reset: How Should We Then Invest?

Thoughts from the Frontline

May 22, 2017

“A speculator is one who runs risks of which he is aware, and an investor is one who runs risks of which he is unaware.”
– John Maynard Keynes

“The biggest mistake investors make is to believe that what happened in the recent past is likely to persist. They assume that something that was a good investment in the recent past is still a good investment. Typically, high past returns simply imply that an asset has become more expensive and is a poorer, not better, investment.”
– Ray Dalio,...

How to Drink from a Firehose

Thoughts from the Frontline

May 14, 2017

Basic economics tells us all resources are scarce, but our demand for them is not. Hence we need methods to allocate the limited supply of each resource. A significant part of economics is the study of those methods.

The Deck Is Stacked

Outside the Box

May 10, 2017

“The individual investor should act consistently as an investor and not as a speculator.”
– Ben Graham

Ben’s admonition is always true, but it’s more true at some times than others. It’s very true today, as investors go on riding the Balloon of No Hard Landings into the stratosphere, clinking their champagne glasses and avoiding looks down over the side of the basket as terra firma recedes ever further. My friend Michael Lebowitz of 720Global has already parachuted out of the balloon, and in...

Angst in America, Part 7: The Angst of the Millennial Generation

Thoughts from the Frontline

May 7, 2017

“Being young and having no job remains stubbornly common. Wages for young people fortunate enough to get a job have gone down. Inflation-adjusted wages for young high school graduates were 11 percent higher in 2000 than they were more than a decade later, and inflation-adjusted wages of young college graduates (four years only) have fallen by more than 5 percent. Unemployment rates for young college graduates have been running for years now in the neighborhood of 10 percent and underemployment...

When Robots Take All of Our Jobs, Remember the Luddites

Outside the Box

May 3, 2017

If you don’t think the transformation we’re embarked upon is a profound one, consider this: Within two decades, half the jobs in this country may be performed by robots. What then of our unemployment rate and social safety net? Opinion is divided: Will the next technological wave further skew the wealth distribution toward the uber-rich, or will it ultimately create more entrepreneurial and job opportunities than it destroys?

There is an interesting historical precedent for our situation, an...

Angst in America, Part 6: Middle Class Blues

Thoughts from the Frontline

April 30, 2017

“We of the sinking middle class may sink without further struggles into the working class where we belong, and probably when we get there it will not be so dreadful as we feared; for, after all, we have nothing to lose.”

– George Orwell

“A strong, educated middle class is what made America the greatest country in the world.”

– Lincoln Chafee

Hoisington Quarterly Review and Outlook, Q1 2017

Outside the Box

April 26, 2017

Lacy Hunt and Van Hoisington kick off their Q1 “Review and Outlook” – today’s Outside the Box – with a bang, calling our attention to the fact that in 80% of the 14 Federal Reserve tightening cycles since 1945, a recession ensued, and the Fed managed to keep the Good Ship Economy off the rocks just three times.

And, oops, we’re in the 93rd month of the current expansion, farther out to sea than we were those three times when the Fed brought us safely in to port, in 1968, 1984, and 1995.

It...

Angst in America, Part 5: The Crisis We Can’t Muddle Through

Thoughts from the Frontline

April 23, 2017

“The ship of democracy, which has weathered all storms, may sink through the mutiny of those on board.”

– Grover Cleveland, the 22nd and 24th president of the United States

“It is your concern when your neighbor’s wall is on fire.”

– Horace

The biggest mistake investors make is to believe that what happened in the recent past is likely to persist. They assume that something that was a good investment in the recent past is still a good investment. Typically, high past returns simply imply...

Taxes Are Worse Than You Thought

Outside the Box

April 21, 2017

“It is a paradoxical truth that tax rates are too high today and tax revenues are too low, and the soundest way to raise the revenues in the long run is to cut the tax rates.” 

– John F. Kennedy (Yes, a Democratic president back in the Camelot days of the early ’60s wanted to slash taxes.)

This week’s Outside the Box will make half of my readers indignant and the other half feel righteously vindicated in their thinking. I have no idea which half you are in. What is so controversial? Who pays...