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THE VIEW FROM THE LAND OF STEADY HABITS
The View from the Land of Steady Habits is commentary on
a wide range of subjects pertinent to portfolio
management, from how investors handle risk to how
feedback loops distort economic behavior and cause asset
price bubbles. See the following listing for
descriptions of the most recent commentaries and some
classic Views.ARTICLES
How Much is a Life Worth?
It is a dreadful calculus, but we cannot avoid putting a
monetary value on a human life. We do it implicitly when
we decide on how much to spend on safety programs. The
subject came up during the health care reform debate but
was effectively skirted by banning lifetime caps on
insurance. But can we really afford to pay whatever it
takes to prolong life? If we start doing so, health care
insurance is likely to become prohibitively expensive.
View Article
Investing and Economics, January
2010
Investors need to know something about economics in
order to understand the broad setting for consumer
spending, business profitability, and investor
opportunity. This is especially true for understanding
how inflection points affect economic activity and
investor risks and opportunities. Investors are
challenged, however, in finding reasonable
forward-looking economic analysis and forecasting.
Economists are dreadful at predicting the future, but
the future is what investors are buying. What's an
investor to do? Be well-informed, observant, and
independently minded. View Article
The Trouble With Numbers,
September 2009
Numbers are the life-blood of investment analysis, but
they are also subject to distortion, misinterpretation,
and misunderstanding. In this View from the Land of
Steady Habits, the Advisor cautions that the trouble
with numbers is not just that we use them to measure
slippery notions like a nation’s economic well being,
the trouble is that numbers themselves are the products
of human activity, and are thereby subject to the
failures and distortions of human nature itself.
View Article
Trust the Government, May 2009
No one seems to trust Uncle Sam these days. Bankers,
business executives, and investors all have concerns
about accepting assistance from the U.S. Treasury or
entering into partnerships with the Feds. Terms and
conditions might be altered. Congress or the
Administration might change the rules of the game. Is
Wall Street right to harbor such suspicions of
Washington? In this View from the Land of Steady Habits,
the Advisor argues that if the future is anything like
the past, the sad answer is that suspicions about the
government are well founded. Uncle Sam can’t be trusted,
and it can be a fool’s bargain to take help from
Washington. View
Article
What Wall Street Needs, April
2009
Does Wall Street need more physicists as Andrew Lo, the
Director of the MIT Laboratory for Financial
Engineering, recently suggested? In this View from the
Land of Steady Habits, the Advisor suggests we should
hold off on hiring more physicists and hire some other
smart people instead. Physicists might not be the best
suited people to understand the animal spirits that
drive economic behavior or to grasp the systemic
influences of the risk and valuation models they create.
Wall Street needs smart people, but it also needs
diversity of talent if the whole is going to be smarter
than the parts. View
Article
The Importance of Asset
Allocation, December 2006
Why do we neglect the most important decision in
portfolio management? Why do we put so much of our time,
energy, and resources into picking stocks and/or
investment managers and so little into determining
long-term goals and asset allocation? In this inaugural
View from the Land of Steady Habits, the Advisor blames
Peter Lynch, human nature, and the fact that asset
allocation management is not very enticing. Asset
allocation is still the most powerful factor in
achieving superior risk/return performance, however, and
investors can improve their allocation management in
three ways. View
Article
See the Archives for other
Views From the Land of Steady Habits.
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