Thoughts From the Frontline, May 2005

The Greenspan Conundrum

May 20, 2005

"There is little doubt that, with the breakup of the Soviet Union and the integration of China and India into the global trading market, more of the world's productive capacity is being tapped to satisfy global demands for goods and services. Concurrently, greater integration of financial markets has meant that a larger share of the world's pool of savings is being deployed in cross- border financing of investment. The favorable inflation performance across a broad range of countries...

Kicks Just Keep Getting Harder to Find

May 20, 2005

"It seems like kicks just keep getting harder to find,
All your kicks ain't bringing you peace of mind,
Before you find out it's too late,
You'd better get straight," - The Monkees

Substitute the word "returns" for "kicks" in the classic Monkees hit and you get an updated boomer generation anthem. (Or maybe Peter, Paul and Mary singing "Where have all the returns gone? - a long time passing.") This week we look at issues involving pension funds, muse upon the size of the financial...

The Problem With Indexes

May 13, 2005

This week we look at index funds, and specifically at the problems that the certain types of capitalization weighted index funds have. It is intuitively obvious that capitalization weighted indexes have a larger proportion of their assets in the larger stocks. But is this what a rational investor should actually want? I think the information we look at today will surprise many.

My good friend Rob Arnott has challenged the conventional thinking with an explosive new study just...

A Stable Disequilibrium

May 6, 2005

This week we look at a speech given by Paul McCulley (Managing Director at PIMCO funds) at my recent Accredited Investor Conference in La Jolla. In it he introduces to us the concept of a stable disequilibrium to describe the state of affairs in world monetary matters. It made a great deal of sense to me and I will try and give you the gist of his thought. For the past few weeks I've been thinking about stable disequilibrium's throughout history and throughout the world of today and...