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Excerpt: In the past decade, food has become so cheap and abundant that a gradual trend towards the premium and the obscure has dominated the food-scape. As a result, prostrating oneself in front of a food trend – whether it is flirting with veganism or vegetarianism, eating local (i.e. the 100-mile diet), eating organic, eating cruelty-free, eating seasonal, has become the favourite pursuit of the elitist and upwardly mobile. The politics of food, particularly the inter-generational gap between how our grandparents, versus how we view food, is explored in this excellent essay by Mary Eberstadt. The fictional character, the 30-year-old Jennifer, is…
From the category archives:
Market and Ideas
Seems to make much more sense than the index-chasing, asset-driven investment approach that everyone’s buried their heads in for the past couple of decades. The concept is not new, and was first introduced to satisfy asset-liability match in large pension plan metrics. Vanguard talks about it (pdf) here in a 2008 paper. When it comes to your personal pension savings, why not invest according to anticipated liability that is specific to your age, risk tolerance, and expected liability profile?
Scientific America explores why so many of us readily subscribe to conspiracy theories and draw conclusions from questionable patterns. It turns out we prefer type I over type II errors.
When our ancestors still hunted in the woods, it’s better to assume that rattle came from a poisonous snake and run, than to take your chances and get bitten. As a result, natural selection favoured those that assumed all patterns were real.
In other words, evolution hearted paranoia.
[via Freakonomics]
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Excerpt: Yesterday I talked about how the market is far, far from efficient. Today, I want to point you in the direction of a Wharton interview with Robert Stambaugh and Jeremy Siegel, who discuss the idea of stock volatility in the long run. In the long run, instead of falling volatility, we are in fact faced with more trend uncertainty that compounds the short-term volatility problem. Uncertainty about the trend itself becomes more important than the actual volatility itself. More specifically: That uncertainty about the trend itself becomes more important the further into the future you project investment outcomes. […] to an…
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Excerpt: HT to my friend James, for bringing this to my attention today. In the last hour, the market ran up dramatically, then quickly dropped. This kind of price movements is hardly an unique occurrence in the world of stock charts, where institutional investors by and large dictate pricing with their gargantuan orders. The market has been relatively quiet for the whole day, with little data released, nor shocking announcements made. So either there’s a large investor (or several) out there running up prices, then quickly dumping them. Alternatively, there’s information or rumours swerving around, privy to a few. This happens, regularly. Plus,…
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Excerpt: The New York Times has gone Oprah! Remember last year when she fronted her magazine O with the big “How could I have let myself go” headline? The Times is attempting the same cheap populism with its personal finance focused magazine this past weekend. One article that stood out and subsequently got a lot of attention was a personal credit crisis “confessional” from one of its own economic reporters. He has a book to promote, so naturally, the paper is there to serve as the springboard. Many bloggers have applauded the “insight” and “braveness” of the writer, while heaping a string…
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Excerpt: Water is perhaps the most scarce resource on earth. Yes, there is water everywhere. But most of the water is not drinkable, not accessible, nor is the resource evenly distributed. It’s not unlike the oil situation, where a small percentage of the earth holds the majority of crude. But unlike oil, water is not replaceable. So how bad is it? A study by the University of New Hampshire shows that some 41% of the world population live in river basins under “water stress” – meaning the region is subjected to frequent shortages. The most readily consumer able source of water, the freshwater…
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Excerpt: Investing is hard for professionals, and even harder for amateur investors. Especially when success is not measured in a cumulative manner – a dozen years of good work can be undone by a bad quarter. I have written about the many difficulties of achieving consistent good performance: from minding the myriad of intersecting forces in order to stay above the water, the skills needed to balance long-term investment principles with technical knowledge, to blocking out noises that only confuse investors. On top of all that, it also serves to see the big picture, particularly forces related to social and demographic…
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Excerpt: When it comes to investing, the general public has been steadily moving away from the old adages that called for set allocation between the (perceived) safe bonds/cash and the (supposedly) more risky stocks. Nowadays, we have all become heavy investors in the stock market, whether it’s outright ownership or group purchasing through our work-sponsored pension plans. Last week, I talked about the importance of market timing, particularly when it comes to market entrance or exit points. When we choose to enter or exit have the largest impact on overall portfolio return, much more than the year-on-year growth, diversification, asset allocation…
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Excerpt: This might seem like a pretty out of the character subject for me to discuss, since I write about sensible, non-hype, and long-term investing principles. Those would be exceedingly prudent and timely given the market onslaught. If you are at all familiar with general investing terms, then you would most likely associate technical analysis with the image of someone hunched over multiple LCD screens, fixated by indecipherable charts and graphs in a range of neon colours, and occasionally yell “Buy!” or “Sell!” with a touch of craziness into the phone. Needless to say, your average value investor would not…
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Excerpt: The human mind cannot grasp the causes of phenomena in the aggregate. But the need to find these causes is inherent in man’s soul. And the human intellect, without investigating the multiplicity and complexity of the conditions of phenomena, any one of which taken separately may seem to be the cause, snatches at the first, the most intelligible approximation to a cause, and says: “This is the cause!” Leo Tolstoy, War and Peace [via The Big Picture] The populist pitch-forking movement has duly commenced, and fingers are pointed in all directions. In a classic case of pot calling the…
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