Wealth Creation Is Another Name For Poverty Reduction

How much lower would the world’s poverty rate be if Warren Buffett’s skills in identifying value in the corporate sphere had evaporated decades ago? How many fewer families living hand to mouth would be suffering if, in 1980, IBM didn’t offer a young Bill Gates and his fledging company the opportunity to develop an operating system for Big Blue’s then-radical idea of producing personal computers for the masses?
Continue reading

Book Bits |14 January 2017

A Good Disruption: Redefining Growth in the Twenty-First Century
By Martin Stuchtey, et al.
Summary via publisher (Bloomsbury)
Disruptive technology is one of the defining economic trends of our age, transforming one major industry after another. But what is the true impact of such disruption on the world’s economies, and does it really have the potential to solve global problems such as low growth, inequality and environmental degradation? The provocative answer is that such disruption could indeed solve many of these issues, but that it won’t… at least, not on its current trajectory.
Continue reading

A Caveat On Backtesting Caveats

Ben Carlson at Ritholtz Asset Management reminds us that backtesting offers no shortcuts to investment nirvana. As he correctly points out, there are numerous shortcomings in the art/science of reconstructing the historical results of an investment strategy. But it’s also true that backtesting, if used wisely, can be a powerful tool for sensibly managing expectations with regards to return and risk. In fact, there’s really no reason not to run a backtest, even on strategies that appear to be free of mystery. The tough part is figuring out how, or if, to use the results. Fortunately, clear thinking and planning can boost the odds that backtesting will be a productive exercise.
Continue reading

Wondering About Stronger Growth Due To Trump

The new era formally begins next week, January 20, when Donald Trump is sworn in as President of the United States at 12 noon eastern. It’s clear that change is coming, on multiple fronts, including a refocusing of economic policy that’s widely expected to boost growth. The question is whether the generally upbeat expectations about the macro outlook are driven by sound economic logic vs. politically driven hype? Perhaps the answer lies somewhere between the two.
Continue reading

Fed’s Labor Market Index Reflects Slower Job Growth

Following last week’s softer-than-expected increase in US private-sector payrolls in December, the Federal Reserve yesterday reported that its Labor Market Conditions Index (LMCI) dipped into negative terrain for the first time in seven months. Although the slightly negative reading remains well above levels associated with economic recession, the latest decline corroborates the deceleration in employment growth that’s been conspicuous in the year-over-year pace for payrolls in recent history.
Continue reading