Economist Scott Sumner makes the case that if we need more stimulus, it should be of the monetary variety rather than fiscal. That sounds about right, based on my analysis at 2009’s close that if there’s any evidence in favor of economically stimulating stimulus over the past year or so, the clues suggest that the monetary toolkit was the productive catalyst for averting a deeper contraction/crisis.

I’ll be discussing the finer points of portfolio strategy, strategic-minded investing and my new book (Dynamic Asset Allocation: Modern Portfolio Theory Updated for the Smart Investor) this coming Monday evening, February 8, on the Gabriel Wisdom Radio Show. The 60-minute show airs at 7 p.m. on the East Coast (4 p.m in the West). I’m scheduled for 7:30 eastern time. You can listen live via the link above or by way of the conventional channels with terrestrial radio (find your local station here.) In addition, the show will be archived here.

Is it really necessary to remind folks not to spend the rent (or college) money on the slot machines? And if someone is actually engaging in such obsessive and self-destructive behavior, is a casual comment to do otherwise from a stranger on TV likely to make a difference? Apparently the President of the United States thinks so. Maybe he’s right. In that case, let me remind everyone to be sensible and avoid the following: driving with your eyes closed, investing every last dime of your life savings in out-of-the-money options and expecting that politicians will focus (and speak) on the priorities du jour.

ADP’s estimate of nonfarm payrolls for January shows a 22,000 decline. That’s in contrast with the consensus view of economists, who collectively expect a small rise of 13,000 in the official jobs report from the U.S. Labor Department, which is scheduled for release on Friday.

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Microcap stocks soared last year, even by the inflated standards of the broad market. The CRSP Decile 10 Index (the smallest of the small in micro-cap land) surged more than 80% last year vs. a bit more than 26% for the S&P 500.
Why didn’t investors in funds targeting this slice of equities reap the lion’s share of the rewards? Rick Ferri of Portfolio Solutions explains the gap (hat tip to Mebane Faber’s World Beta blog). Ferri argues that microcap index funds “don’t exist, because micro-caps are too small for index funds and ETFs to invest in.”
We’ll have more to say on the subject in the near future in terms of what it means for multi-asset class investing. Meanwhile, you can read Ferri’s article at Forbes.com.

Friday’s nonfarm payrolls promises (threatens?) to be a critical update on the labor market. Basically the question is, If not now, when?

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