I’ve argued in the past that wealth acquisition is a good thing (provided it does not arise from theft or fraud).  There are several reasons for this.  The most obvious is that spectacular wealth generally arises from spectacular success of an entrepreneurial venture, which almost by definition means the creation of some great new product… Read more

The First Law of Economists: For every economist, there exists an equal and opposite economist. The Second Law of Economists: They’re both wrong. -Economist, David Wildasin[1]   It has been accurately noted in a number of different contexts that economists don’t agree on much. Consider the example of the Obama Administration’s nearly 1 trillion dollar… Read more

Reprinted from our December 2017 Publication To our great surprise, the Republican legislature appears close to passing tax reform. As recently as the previous forecast publication, we argued that the probability of such reform was low and rapidly vanishing along with healthcare reform. We noted, at the time, that Republicans lack the political skill (or… Read more

Stock market prices fell 12% during the first week of February.  This comes after a rally of 25% during the previous thirteen months (all percentages based on movements in the S&P500 stock index). Naturally, this is of concern to investors.  But it is not necessarily a big deal.  In fact, it could be a good… Read more

The Federal Reserve quarterly Flow of Funds report shows that Household sector net worth (value of assets less liabilities) reached nearly $100 trillion in 2017, more than five times GDP.  Economic theory has a difficult time in explaining why households have accumulated this much wealth.  According to the Life Cycle Consumption Model, people save during… Read more

Ray Dalio is the founder of Bridgewater Partners (BWP), the largest hedge fund in the world.  He has recently published a book Principles in which he describes the work and life principles that have contributed to Bridgewater’s success.  The primary goal since the firm’s inception in 1975 was to be an “idea meritocracy” based on… Read more

Written by Matthew Fienup and Dan Hamilton The Bureau of Economic Analysis just released its Ventura County GDP data for 2016. Accompanying the 2016 number are revisions to GDP estimates for 2015 and 2014. The data on Ventura County economic activity was a punch to the gut for the entire CERF team. Ventura County’s economy… Read more

It is well known that one really good way to get extremely rich is to hold a large concentrated position, often as the founder, in the stock of a company that realizes extraordinary success.  Another way, generally viewed to be less reliable, is to win the lottery.  In a very interesting research report, finance professor… Read more

James Parry knew at a young age that he wanted to grow up to be a money manager.  It was during his undergraduate years at the University of Washington in Seattle, that the economics major first subscribed to the Financial Analysts Journal (FAJ), the flagship publication of the professional society for Chartered Financial Analysts (CFAs). … Read more

In a stunning memoir (Beer Money), Frances Stroh, the great-great-granddaughter of beer magnate Bernard Stroh, catalogs the collapse of the family business and family wealth in less than one generation.  The Stroh’s were one of the richest families in America as recently as the 1980s, worth $700 million according to Forbes Magazine.  Refusing to bring… Read more

Susan Gates, a long-time executive at the Federal Home Loan Mortgage Company (Freddie Mac), has written a riveting account (The Days of Slaughter) of her years at the company, leading up to and through the financial crisis of 2007-2008.  As you may recall, the two major Government Sponsored Entities (GSES) Freddie Mac and older and… Read more

A typical device used in designing company strategy when financial outcomes depend strongly on a market price is a so-called “hedge report” or “sensitivity report” that shows the change in profits or market value associated with a positive or negative change in the underlying market price (which is sometimes called a “risk factor”).    When portrayed… Read more

You may recall the movie Forrest Gump in which the title character, played by Tom Hanks, was a simple person who happened to have a ringside seat on many of the major events in American history in the 1950s through the 1970s.  Forrest may have had a low IQ, but he was extraordinarily successful –… Read more

In a recent essay (“Investment Advice for Ray Kurzweil”), I extolled the benefits of the “1% Ratchet Rule” under which a family would spend each year 1% of the high-water mark of family wealth.  The rationale for this rule is simply that it works for someone who plans to live forever, like Ray, or for… Read more