Unintended Consequences:  Iraq, Pensions and Index Funds

Each week, I typically sit down at noon on Friday to write this letter. Quite often I stare at a blank screen pondering what to write about. Last week, and this week, my task has been to decide what NOT to write about. There is just so much that is worthy of our attention: pensions, indexing, Iraq, the drop in gold and the rise in stocks, international turmoil, the misleading headlines in the investment media and more. I have to leave the office without fail at 5:30 (kids come first), so let's see how much we get covered.

The context for this week's thoughts was provided to me by Art Cashin, head floor trader at UBS Warburg and also of CNBC fame. He writes a privately circulated and brilliant daily letter which is absolutely one of the most fun and informative tomes I read every day, without fail. His bosses need to allow him to circulate it to a wider audience. He wrote last Monday about unintended consequences, and provided the following…