Diary of a Financier

Top Newsstuffs (January 14-20)

In Bookshelf on Sun 20 Jan 2013 at 07:29

Short list this week; same churn about 2013 forecasts and Congressional wrangling over spending cuts… Go Pats!

Regression analysis of historical secular stock markets | Lighthouse Investment Management
Research covered data from 1950-2012:
89% of bull market performance can be explained by time duration (r-squared); average secular bull lasts 1669 days/+109% median (mean 1878 days/+164%, skewed higher due to 1987-2000 outlier). That means the current bull will end October 2013 (per median) or April 2014 (mean).
Bear markets average 517 days/-34%, but they depend less on duration (29% r-squared) and more on fundamentals, specifically leverage–the more leverage gets stretched, the deeper the correction, since equity = assets – liabilities.

Infographic: Everything you need to know about investing in silver | Visual Capitalist
Silver compared to Gold: $31B vs. $222B annual demand; $1T vs. $9T annual trading; 46% vs. 10% industrial demand; much smaller, less liquid market means more volatility.
For diversification, silver has low correlation to VIX (-0.10) & SPX (+0.10).
[Previously, gold.]

The Eurozone & Greece: What’s the status of the Eurocrisis? | Yanis Varoufakis
Banking & debt crises have not been decoupled; debt/fiscal mutualisation has been abandoned; OMT hasn’t been employed yet (the mere announcement was enough of a threat to instill confidence); Greece still in a deathspiral due to zero credit creation, but removal of drachma conversion risk has softened the blow; periphery’s recession has infiltrated the core.
[The lack of progressive reform during this recession means both the US & Europe face exacerbated crises upon the business cycle’s next turn.]

The soul of student debt: Its history & the cause of the tuition bubble’s surge | Jacobin
As more Americans pursued their degrees, public colleges absorbed the incremental enrollments, but states have woefully underinvested in their universities (real funding per student -26% since 1990), leaving the onus on tuition (+112.5% over same time).
[Looking at the enormity of most endowments, I have trouble believing high tuitions are attributable to a lack of other means of capitalization, especially public funding. Schools are an oligopolistic cartel, selling an essential service with unchecked means of attaining annual growth targets, and tuition happens to be the variable they most flexibly control given demand inelasticity. As tasked by their Boards of Trustees, presidents run their schools like a business… like an unregulated corporation.]

Germany will begin repatriating its gold from US’s New York Fed, Banque de France | Bundesbank (Buba)
Germany will repatriate part of its gold that’s custodied abroad, bringing the domestic stock up to 50% and withdrawing all of France’s reserves.
By 2020: NY’s stock will drop from 45-37% (-300 tonnes), Frankfurt up 31-50%, London stay at 13% (unch) & Paris wiped out 11-0% (-374 tonnes).
#Trust #Confidence

12 cognitive biases that prevent you from being rational | io9
1. Confirmation bias
2. Ingroup bias
3. Gambler’s fallacy
4. Post-purchase rationalization
5. Probability neglect
6. Observational selection bias
7. Status-quo bias
8. Negativity bias
9. Bandwagon effect
10. Projection bias
11. Current moment bias
12. Anchoring effect

The late rise of the digital revolution: A boon for the global economy, civilization, standard of living | Bill Gates (Microsoft)
The proliferation of mobile devices in Africa didn’t lead to the digital empowerment expected over the last 10 years, but new startups are convincing the 3rd world that mobile technology is worth using.
Mentions: mHealth central database & M-Pesa Kenyan mobile banking.


  1. […] to balance austerity with growth after 2010’s $68B deficit ($2B budget) sent a wakeup call. [Previously] #Education […]

  2. […] The price of paying attention | Barry Ritholtz (The Big Picture) Tune out what’s unimportant; lose the news; watch the signals, not the noise; focus on what you can control (not binary/indeterminable events): “While the market’s up/down, back and forth make it appear over the short term that these things are oh so important, the simple reality is they are utterly meaningless. There is always going to be some crisis, some news event, some ‘most important thing in the world right now,’ and always has… all of these ‘earth shattering events’ each end up being ‘tears in the rain’—a momentary emotional blip of little consequence… gossip, with next to no significance to the overall global economy, filler… Remember, the end of the world bet has been a money loser since the beginning of time.“ #Cognitive biases […]


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