Monthly Archives: October 2009

Seven Recommendations: A Government More Responsive To Its Citizens

This is not a political blog.  That said, almost all writing on economics and business embeds a political point of view.  I recognize that my view is relatively libertarian with respect to economics/business, but conservative with respect to ethical issues.  There are a few things that I think would get wide agreement from many parties, […]

On Bond Investing, ETFs, Indexes, and the Current Market Environment

Bond indexes are what they are.  They represent the average dollar invested in the bond markets.  Those that say that the indexes are flawed miss the point.  Indexes represent the average return of an asset class, with all of its warts and wrinkles.  That is the nature of an index; it earns what the asset […]

Some Praise and Questions for the US Treasury

1) Perhaps the US Treasury is getting a few things right.  Let’s start with lengthening the average maturity of Treasury debt.  I have backed this idea in the past.  It is worthy to note that zero coupon yields peak out around 20 years out, and then start declining.  It is quite possible that debt longer […]

Book Review: The Bogleheads’ Guide to Retirement Planning

This was a book that I did not ask for.  Wiley has been sending some books unsolicited.  I’m not glad on all of them, but I am glad they sent this one. Much as I admire Jack Bogle, I am not a Boglehead.  Low fees?  Yeah.  Diversification without overdiversification?  Sure.  Asset allocation?  Top priority.  Passive […]

Toward a New Theory of the Cost of Equity Capital, Part 2

When I write a piece, and entitle it “Toward…” it means that I don’t have all of the answers.  Typically I think I am getting somewhere, but the speed of progress is open to question.  That said, good questions and constructive criticism aid me on my way. From Private Equity Beat at the WSJ: Toward […]

Toward a New Theory of the Cost of Equity Capital

I have never liked using MPT [Modern Portfolio Theory] for calculating the cost of equity capital for two reasons: Beta is not a stable parameter; also, it does not measure risk well. Company-specific risk is significant, and varies a great deal.  The effects on a company with a large amount of debt financing is significant. […]

Book Review: Expectations Investing

Why don’t average investors use discounted cash flow analyses?  Typically, they don’t use them for several reasons. Most people don’t want to use an algebraic formula to estimate anything.  As some legendary trader reputedly yelled at a quant, “No formulas!  You can make me add, subtract, multiply, and divide!…  And don’t make me to divide […]