Before I start this evening, I would like to explain some of the reasons for these “Best of the Aleph Blog” articles. I write these no closer than one year after an article was written, so that I can have a more dispassionate assessment of how good they were. I write these for the following reasons:
- Some people want a quick introduction to the way I think.
- Some publishers on the web want additional copy, and I let them republish some of my best pieces.
- One day I may bundle a bunch of them together, rewrite them to improve clarity, and integrate them to create a set of books on different topics.
- One of my editors at RealMoney once shared with me that I was one of the few authors there whose articles got re-read, or read after a significant time had passed. This is meant to be mostly “timeless” stuff.
- New readers might be interested in older stuff.
- I enjoy re-reading my older pieces, and sometimes it stimulates updates, and new ideas.
Anyway, onto this issue of the “Best of the Aleph Blog.” These articles appeared between August 2012 and October 2012:
Why credit scores are important; make sure you guard yours.
On the pathologies of being an amateur investor when there are those who will take advantage of you, and you might sabotage yourself as well.
Goes through the details of how a school district outside San Diego mortgaged the future of the next generation who will live there, if any will live there.
A series of articles inspired by what I wrote at RealMoney, encouraging people to be careful about listening to advice in the media on stocks, including those recommended by Cramer.
On why patience and discipline are required for good investing.
A retrospective, if somewhat controversial.
Replace the DJIA with a new cap-weighted index of the 30 largest capitalization stocks.
You have to understand Buffett the businessman to understand Buffett the investor.
How an interview I messed up led to an interesting way to explain volatility.
Eventually we need to eliminate gerrymandering — hey, maybe we can do that at the future Constitutional Convention.
Creating exams where you can’t study for the test; you can only study.
Governments imagine that they can shape outcomes, and in the short-run, they can. In the long-run, the real productivity of the economy matters, and only those that can make it without government help will make it. Whatever government policy may try to achieve, eventually the economy reverts to what would happen naturally without incentives. There is a natural carrying capacity for most activities, and efforts to change that usually fail.
On why Actuaries are much better than Quants
Applying math to economics has been a loser. Who has a consistently good macroeconomic model? No one that I know. Estimates of future GDP growth and inflation are regularly wrong, and no one calls turning points well.
A quick summary of risk in bonds, and why additional yield is often not rewarded.
On working out the pricing between discount, premium, and par bonds.
Investment is a good thing, overinvestment is a bad thing.
On Buffett and others carrying cash to give themselves flexibility.
On what uneducated investors should do.
Short piece pointing out that small crises are needed to prevent huge crises.
Cash flow matching has often been sneered at as an investment policy. I explain why such a view is naive, not sophisticated, and definitely wrong.
“Once something is used for hedging purposes, it becomes useless for predictive purposes.”
On the downsides of blogging, and why they aren’t so bad.
Coming to a country near you, and soon!
How young analysts toughen up through hard competitions.
On how to reform High Frequency Trading
Far from offering high price appreciation, it is far easier to cheat many people by offering a high yield, because average people look for ways to stretch their limited resources with a tight budget.