We have shown in prior blogs how do-it-yourself investors can achieve reasonable investment returns through the use of low-cost highly diversified passively managed funds. How can non-do-it-yourselfers obtain these same benefits? There are financial advisors who specialize in these services, but often not at an acceptable level of cost. Recently, a marriage of technology and… Read more

Previously published on October 29, 2015 on Newgeography.com   California has a long history of boom and bust cycles, but over the past 25 years or so, California’s cycles appear to be becoming more volatile, with increasing frequency, higher highs, and lower lows.  The fast-moving business cycle may not provide the time necessary for many… Read more

John Cochrane is professor of finance at the Booth School of Business at the University of Chicago and is an expert on the theory of asset pricing. You can take (or audit) his free online course through Coursera. In this course he starts out by briefly summarizing the state of the art in asset management… Read more

In late 2008, U.S. banks accelerated consolidation driven by intense Federal government pressure (many failing banks were “saved” by being acquired by a larger bank). This yielded a banking structure where today the largest five U.S. banks control over 44 percent of the nation’s banking assets. The five largest U.S. banks held assets of $6.7… Read more

Previously published on September 2, 2015 on Fox and Hounds As California weathers its fourth straight year of extreme drought, policy makers and their cheerleaders continue to scapegoat California’s agricultural industry. Writing in the Sacramento Bee, economist Christopher Thornberg, for example, refers to the industry as “feckless” and advocates using eminent domain to seize farmers’… Read more

The Federal Open Market Committee began its two day September meeting yesterday, where it will consider raising the short-term policy rate, or the guidance on that rate. It has been nine years since the committee has raised this rate. The prospect of higher rates has financial markets and their commentators very nervous. The rate-raising event,… Read more

John C. (Jack) Bogle graduated from Princeton University in 1951 and founded The Vanguard Group, Inc. in 1974. In 1975, Vanguard introduced the first so-called “Index Fund” based on the Standard and Poor 500 (S&P500) stock index. The S&P500 is a market capitalization weighted average of 500 of the largest stocks that trade on the… Read more

Previously published on August 29, 2015 on NewGeography.com I recently made a couple of tweets/Facebook posts pointing out that market declines threaten California’s budget surplus. I referenced articles in the WSJ and Bloomberg, and I thought the observation was non-controversial—almost banal. So I was surprised at the feedback. One person asked why. Another said it… Read more

In general, we expect that a beginner or novice in a field is likely to be out-performed by a seasoned veteran. We would be surprised if a beginner could build a better house than a skilled carpenter, or if an amateur boxer could knock out a pro. Yet, something like this may be true in… Read more

Bryan Caplan at George Mason University and the Library of Economics and Liberty has a couple of posts on medical screening and treatment. First, Caplan shares data on prostate cancer.  It turns out that screening does nothing good for the patient: That’s right.  Statistically speaking, prostate cancer screening is worthless.  Over the course of ten years,… Read more

Nobel economist Edmond S Phelps has a piece, What is Wrong with the West’s Economies?  He discusses the alarming slowdown in western economies dating back to the 1960s, a lack of what he call flourishing or a narrowing of innovation.  It’s a nice piece and I recommend reading it in its entirety.  As you might expect,… Read more

“It’s no longer legal to say, ‘We don’t want African-Americans to live here,’ but you can say, ‘I’m going to make sure no one who makes less than two times the median income lives here,’” Jargowsky told me. The above quote is from an Atlantic article on the resurrection of American slums.  I recommend the… Read more

Once a year, the U.S. Bureau of Economic Analysis (BEA) releases a new set of economic growth estimates that include not yet released numbers for the second quarter and revisions to historical GDP estimates as far five years back. Today is that day. The first estimate of 2015’s second quarter economic growth is 2.3 percent,… Read more

Here’s the first paragraph from a FED press release of July 20th: The Federal Reserve Board on Monday approved a final rule requiring the largest, most systemically important U.S. bank holding companies to further strengthen their capital positions. Under the rule, a firm that is identified as a global systemically important bank holding company, or… Read more

California’s water regulatory environment is a mess.  One result is that it’s expensive and often arbitrary.  It’s expensive to support, but that’s the not biggest cost.  The real loss is in the efficient use of water. Since allocation in California is increasingly a political process, there is no reason to believe it’s economically efficient.  Indeed,… Read more