Perspectives
Spurious Correlations & Interest Rates
May, 2018
Did you know that two things can be strongly correlated and yet completely independent of each other at the same time? We love relationships – even relationships that aren’t there. Maybe it’s a human need. The website spurious correlations has a lengthy list of absurd correlations. For example, the number of Nicholas Cage films in […]
Regulation & the Attention Economy
May, 2018
Starting in the early 1900s, automobiles and air travel transformed the world by making it a smaller place. In the early days, these industries were the wild west with lax safety regulations and frequent accidents. As the transport industry became increasingly important, regulatory scrutiny led to an increase in the number of regulations. The first […]
Boring Banking
May, 2018
“If we want things to stay as they are, everything will have to change”. The most famous line in “The Leopard” by Giuseppe di Lampedusa illuminates the paradox at the heart of investment. Of all the moving parts that comprise a modern economy, finance is the most conservative activity least amenable to innovation. Indeed, when […]
Beating the Market
April, 2018
Physics envy has done a lot of harm to economics and the humanities. This probably happened because of the astronomical leaps in physics starting with Newton in the 18th century where he predicted the motion of distant planets and Einstein in the 20th century where he showed the random motion of atoms. If physics could […]
Haven Currencies
April, 2018
In September 2017, North Korea fired a missile over Japan and yet somehow, the value of the yen went up. The threat of a possible war could not change investors mind about the safe status of the Japanese yen. Was this caused by a reversal of a carry trade or because everyone views the yen […]
The limits of intuition
April, 2018
Human brains have been wired through years of evolution to think intuitively. This fast, emotional and automatic way of thinking was useful for our ancestors in navigating the Savannah of East Africa and escaping lions. If a lion was chasing you, spending too much time deliberating whether it is friendly or not wouldn’t end well […]
Trade Wars
March, 2018
Our quarterly investment conference takes place next week when we take the time to review the data coming out of the world economy. Is the global economy contracting or expanding, what is the impact for the cost of capital and where should investors be positioned to navigate the changing tides of international capital flows? What […]
Not all FAANGs are Created Equal
March, 2018
Investing is laying out money now with the reasoned probability that you will receive more money in the future, adjusting for your good friends Mr inflation and Mr Tax who will help themselves to a portion of your earnings. When you buy shares in a company or put money in a fund, you become a […]
Groceries and Capitalism
March, 2018
In 1798, Thomas Malthus predicted that population growth would outstrip food production leading to declines in the quality of life. If Malthus was lucky enough to read our Tacit Thoughts, perhaps he would have understood the futility of making forecasts about complex systems with lots of moving parts. The ‘complex system’ is planet earth and […]