The Volatility of Volatility, September 2
Capital markets are inherently volatile. The average daily price swing on the S&P 500 has been approximately 0.9% since 2005.  So when capital market observers tell us that the markets have been volatile or will be volatile, are they telling us anything we don't already know?

Are Stocks Overvalued? Is the Hindenburg Omen Due for Confirmation?, August 28
Whether the market is overvalued or undervalued is a perplexing question. The fact is we can't know how the market is valued today, because we don't know what the future will bring.  We can, however, make judgments about future returns.  This update of the Advisor's June stock market outlook concludes that U.S. large-cap stocks still offer the prospect of compound returns of more than ten percent per year over the next four years, although the ride might be very bumpy between now and then.

Preserving the Constitution, August 25
British constitutional theory may have something to teach Americans about what it means to preserve the Constitution and may help save us from paralyzing political arguments that interrupt the real pragmatic work of restoring economic growth and employment.

Balance This! August 24
A detailed looked at the Federal outlays budget for 2010 by department shows the challenge the U.S. faces in reducing its fiscal deficit.  Unless mandatory spending programs, such as Social Security, Medicare, and Medicaid, are reduced, balancing the budget will require tax increases no matter what economies are found in discretionary spending programs.

Hedge Funds and Portfolio Diversification, August 20
The blog entry for August 20 is a notice about a new research article on hedge funds and portfolio diversification and one particular hedge fund, Walbridge Long-Short Strategies Fund, that looks to be as close to a perfectly efficient portfolio asset as one is likely to get.  See the link to the article under the Current Research button in the left-hand column or follow the links through the blog.

How Much Inflation Is Enough? - a correction, August 17
In the blog entry of August 4, " Intimations of Deflation?", the Advisor failed to distinguish between a target range for inflation and a point target.  The distinction raises an interesting question.  Why don't central banks set a target range of -1.0% to +1.0% for inflation?  The answer has to do with avoiding deflation traps and the fact that central banks can't set short-term rates at less than zero.