Blog

Blog split

I have effectively split this blog into two. I will stop posting on investment and finance related topics here, and instead post on my new blog on my Moneyterms site.

America vs the world

Listening to a funny and relentless condemnation of the American Imperium and its current government from [book]Gore Vidal[/book], I felt rather sorry for the American ambassador who was in the audience. It was clear the feelings of the audience were very much with Gore Vidal, and very much against everything it is the ambassador’s job to push.

Ban football, not video games

Lots of people (especially American politicians like Hillary Clinton) are worried about the effects of violent video games, despite the complete lack of evidence that there is any effect. Perhaps the regular calls for restrictions on children’s exposure to corrupting material should instead focus on team games, now that there is evidence that watching American Football makes people violent.

Psst! Want to buy an illegal book?

Would you like to buy a book that breaks British Law? Whose authors could go to jail? The printed version has sold out, but you can still buy a PDF copy of Glorifying Terrorism, a collection of science fiction short stories. There are reviews at David Langford’s Ansible Link and The Guardian.

Beyond capitalism?

This blog post by an academic economist raises a question that I am convinced we can already see part of the answer to. Industries that have a negligible marginal cost of production (media, software, etc.) demand a different economic system.

The gospel according to neo-conservatives

Here is my attempt to bring the Bible into line with modern values. I am particularly trying to help neo-conservatives and neo-liberals who have an exceptionally hard time in reconciling what they know to be right with Jesus’s old fashioned ideas.

Good ratio, bad ratio

I recently added a page on the naked PE to Money Terms. A post in response to this by Richard Beddard (thanks to whom I came across the ratio in the first place) lead me to a clearer description of why it is good — and why the PEG is bad.

How to make customers buy

Suppose customer A buys a product combination X + Y, and hires B to install the product for them. Suppose you are the vendor of Z and had hoped the customer would buy X + Z. It looks like you have lost the deal: but someone came up with an ingenious solution.

Wisdom of crowds does not apply to stock picking

I have, over the last few weeks, read a few different articles about “social stock picking” which aims to apply the “wisdom of crowds” to stock picking. This is neither new, nor a good idea.

Moneyterms RSS feed

Rather than keep posting repetitive “what’s new on Moneyterms” posts here, I have added an RSS feed of the latest additions to Moneyterms, it can be added to any feed reader, to Firefox as a live bookmark, etc. The latest additions to Moneyterms are also now shown on the home page of this site, at the bottom of the side bar.

CAPM: wrong but useful

I previously wrote a defence of CAPM in reply to this post. Even given that the empirical empirical evidence shows that high beta portfolios do not generate higher returns, the beta is still useful for investors.

Forget index tracking

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.

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.

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).

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.

Credit crunch humour

Two outstanding bits of humour:

This cartoon at the Washington Post: found via this blog post.

The Daily Mash understands the government’s action over Northern Rock better than most of the serious media.

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.

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”.

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.