The Best of the Aleph Blog, Part 6

This segment takes us through the period May-July of 2008, as the crisis slowly built to the peak of its cashflow deficit, with many saying that it was a liquidity crisis, not a solvency crisis.  Anyway here is my best from that era:

What is Liquidity? (Part II)

Goes through the three definitions of liquidity, and shows how they are related, particularly when liquidity is scarce, even though they are different phenomena when liquidity is plentiful.

Why Do I Blog?

Many are writing about this topic now, and this is what I wrote about it then, unbidden by others.  From the piece:

Blogging is in many ways tougher than being a young journalist. A blogger starts with no audience, whereas a young journalist has an audience from the publication. The young journalist will be guided in what to write about by his superiors, and will automatically get edited. The blogger has to figure out what he can adequately say, and whether anyone really wants to read him. The young journalist will have discipline imposed on him, whereas most successful bloggers have to develop their own discipline — one consistent with their posting style and frequency. Blog audiences decay rapidly with lack of attention, and there is a lot of competition to be heard. Journalists succeed or fail as a group, and the individual journalist does not have a lot of effect on that.

Seven-Plus Years of Trading for the Broad Market Portfolio

Losing Money is Part of the Game (Part I)

Losing Money is Part of the Game (Part II)

Average? I Like Average, if It’s My Average. (Part I)

Average? I Like Average, if It’s My Average. (Part II)

My Best Investments Over the Last 7+ Years

Concluding the Current Portfolio Management Series

The seven articles listed above involved a lot of work, explaining how I mostly made money on my portfolio, but how I also had my share of losses, en route  to doing very well over 7+ years.  I am still managing money the same way today, with reasonable success versus the market.
Blowing the Bubble Bigger

My summary of Kindleberger’s paradigm:

  • Loose monetary policy
  • People chase the performance of the speculative asset
  • Speculators make fixed commitments buying the speculative asset
  • The speculative asset’s price gets bid up to the point where it costs money to hold the positions
  • A shock hits the system, a default occurs, or monetary policy starts contracting
  • The system unwinds, and the price of the speculative asset falls leading to
  • Insolvencies of those that borrowed to finance the assets
  • A lender of last resort appears to end the cycle

Facilitating the Dreams of Politicians

This wasn’t my first article on municipal pensions.  I think the first one was three years earlier at RealMoney, and I had a few a Aleph Blog.  The greatest way that municipalities cheated on their finances was through underfunding their pensions.

Abandon the Playbook; Adopt the Global Playbook; Adjust the Playbooks for Valuations

The idea here is that the old ideas for industry cycles should be abandoned, because we no longer live in a world where the US is all that matters.  We need to look at global demand, not US demand.  The same for supply.

Ten Notes on Crude Oil: The Fixation

Surprisingly, this is the most read article on my blog.  I could not have predicted this, but with oil prices going through the roof, my post that was neutral on the price action was hot for the market as a whole.  As I re-read it, I see why it was a great article, taking into account a wide number of disparate views.  This is close to blogging at its best.

Avoid Debt Unless it is to Purchase an Appreciating Asset

There are a lot of dopey opinions on saving, particularly from macroeconomists.   Debt is a curse, unless the opportunity is compelling.

Saving at young ages sets the tone for the rest of life.  The lifecycle saving hypothesis (of Milton Friedman) is wrong, because most people don’t possess the discipline to switch between being a borrower to being a saver.  Many do it, but not the majority. I saved money when I was a grad student, though most of my colleagues did not.

The Four Stages of Investment Knowledge

This is true in many disciplines.  Seeming knowledge gives way to disappointment, leading to greater knowledge in the long run.

Rethinking Comparable Worth

Sadly, one one of my most important pieces, explaining why the developed world should in general should expect shrinking incomes in the face of an expanding global capitalist system.

Fannie, Freddie, and the Financing Methods of Last Resort

Anticipates what will happen in a few months.

General Motors = General Malaise

I predict that GM will die, and not for the first time.

Buy Agency Mortgage Bonds

I don’t often offer categorical buy signals but the few I do offer are typically good.

Thinking About Dividends

Are dividends the unique way to tilt portfolios?  I don’t think so.

The Nature of a Crowded Trade

Holding an asset with a short time horizon for disposal is a crowded trade, if many others have a similar idea.

You Can Sue, But You Won’t Win

More on the Financial Insurers — losses were inevitable.

The Fundamentals of Market Bottoms, Part 1

Bottoms and tops are different, what can I say?

Covering Covered Bonds

Covered bonds were cool for a moment in the US, and I covered it.

What are the Limits? Are there Limits?!

With deficits that are low by today’s standards, this piece was pessmistic.