I have been leaning towards passive investment for sometime, but I had not seen any evidence or argument that helped decide whether tracker funds or buy and hold mechanical strategies were better. Thanks to the Behavioural Investing blog I found this illuminating paper.
Author: Graeme
CAPM is OK
Richard Beddard not only endorses a condemnation of CAPM, but he wants to know if I am reading. I say it is the worst valuation model, apart from all the others. Continue reading
Immigrants: less criminal than native borns and essential
In the last few days I have seen two solid pieces of evidence emerge for my views on immigration. The first is research showing that immigrants are more law abiding than the native born (found via Unintended Consequences). The other is the experience of American towns which cracked down on illegal immigrants, only to rethink after seeing how damaging this could be to their economies (thanks to Brad De Long). Continue reading
New on Money Terms
The latest additions to Money Terms are:
- passive investing, which adds a more general discussion to subjects already coverd by other entries,
- the closely related trio of crash, correction, and bull run,
- an explanation of what embedded computers are.
Free speech is dead
Alisher Usmanov’s shut down of Criag Murray’s blog is yet another example of how British law makes it easy for the rich to shut down less well heeled critics with the threat of legal action. They do not need to actually convince a court that they have been libelled. Continue reading
Credit crunch humour
Two outstanding bits of humour:
This cartoon at the Washington Post: found via this blog post.
On a slightly different topic The Daily Mash also has a good grasp on the future of work: die at your desks.
A better PEG ratio
While making some improvements to the Moneyterms explanation of the PEG ratio, I started thinking about ways of addressing the weaknesses of this ratio. The main problem with it is its short term nature, which makes shares that have mere enjoyed spikes in their growth, look like bargains. Continue reading
Northern Rock should have been allowed to fail
Willem Buiter is quite right to criticise the Bank of England’s bailout of Northern Rock. The message to bank directors and shareholders is quite clear: “take big risks, and if they go wrong the taxpayer will pay for your mistakes, if they work, you can keep the profit”. Continue reading
New Moneyterms site
I have moved Moneyterms to new hosting and to the wonderful Modx platform. The time spent developing the new site was minimal, but I also replaced all the automatically generated “related page” links with manually chosen lists, which was a lot of very tedious work. It should improve site navigation.
I also removed the “Guides” section, as it was simply not good enough. It will reappear with rewritten material.
Now that is behind me I have started adding new entries again, starting with style index, discount rate, long term PE, market neutral and synthetic security.
Actively manage your pension
Most people are quite happy to allow a fund manager to look after their pension, even those who actively manage other investments. I suggest the opposite. There are very good reasons for concentrating on your pension. Continue reading