Category Archives: economics

Does Your Forecast Consider The Punchbowl?

Here is David Merkel: Unless revenue growth kicks in, that means the profit margin, already at record highs, will soar to an astounding record. But won’t revenue growth begin again? That’s hard to say, but if revenue growth starts in … Continue reading

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Failure Is a Precious Thing

Ahem. Failure is actually an awful, painful and humiliating thing but its retelling sticks so much more firmly in our minds. Hearing how smart, motivated, honest people fail is valuable: put yourself in their place, empathize with their horrible decisions; … Continue reading

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Insurers (finally) Starting to Ape Buffett

David Merkel reviews Buffett’s 10k: Buffett does very well, but I know of no other insurer that invests so much in equities funded by insurance liabilities.  There is a real risk that if the markets fall hard, a la 1929-32, … Continue reading

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Moral Hazard is Corporate Kryptonite

In *Thinking Fast and Slow*, Kahneman relates a story told to him by Richard Thaler. It goes like this: Once there was a gathering of executives from a large company. Each were asked about taking risky projects with a positive … Continue reading

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An Important New Model For Stock Pricing

We’re geeking out today. Assets are priced differently and we don’t know why. Treasuries have different return characteristics than stocks, for example, and these characteristics change over time, even if the risks do not. Economists have a fancy term for … Continue reading

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Incompetent S&P’s Day of Reckoning?

Felix Salmon has an excellent piece on how S&P royally effed over some municipalities in Australia and now might actually have to pay for its incompetence. Put it all together, and you get a very shocking view of S&P. Here’s … Continue reading

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Technology Giveth And Taketh Away

Independent Insurance agents are again on the rise. See below for a quote. The story goes that technology forced consolidations in the 90s. Brokers needed scale and capital for SYSTEMS and batteries of tech priests to keep server rooms humming. … Continue reading

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