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The Aleph Blog wrote a new blog post titled What Caused the Financial Crisis?
Photo Credit: Alane Golden || Sad but true — the crisis was all about bad monetary policy, a housing bubble, and poor bank risk management======================There are a lot of opinions being trotted around ten years after the financial crisis.  A lot of them are self-serving, to deflect blame from areas that they want to protect.  What you are going to read here are my opinions.  You can fault me for this: I will defend my opinions here, which haven’t changed much since the financial crisis.  That said, I will simplify my opinions down to a few categories to make it simpler to...
94 days ago
The Aleph Blog wrote a new blog post titled The Balance: Short Selling Stocks- Not for the Faint Hearted
Photo Credit: Heather Wizell || Ah, Wallstrip with Lindsay Campbell (look at the microphone…)===========================================Here’s another article that I edited at The Balance: Short Selling Stocks- Not for the Faint Hearted.  The original author started out conservative on the topic, and I took it up another notch.For this article, I:added the information about changes to the uptick rule (which did not reflect anything post-2006),corrected a small math error,made the example more realistic as to how margin works in this situation,added almost all of the section on...
105 days ago
The Aleph Blog wrote a new blog post titled The Balance: Are You a Speculator or an Investor?
Photo Credit: Bernard Spragg. NZ || Ah, Hong Kong. Home to speculation and Investment.==========================One thing to do at The Balance is fix old articles.  This article compares speculators and investors.  What I brought to this article was the following:Change the phrasing from trading to speculating to be more pointed.Add more and better criteria to what an investor does.Added the entire section “What To Do”Added a picture and more links.  Corrected grammar in a few spots and tightened up some language.The main reason to edit this article as I did was to give readers...
108 days ago
The Aleph Blog wrote a new blog post titled The Balance: Considering Event-Driven Investing
Photo credit: miltarymark2007===========================I published another article at The Balance: Considering Event-Driven Investing.  This is one place where writing in the third person leaves a lot out.  I’ve done a lot with some types of event-driven investing.Speculating on hurricanes — I did that successfully at the hedge fund 2004, 2005 and 2006.  2006 because I thought the risk of another strong hurricane year was overplayed.  2004 and 2005 because I had a good idea of who was underreporting claims after disasters.  That was the only time in my life that I went from long...
109 days ago
The Aleph Blog wrote a new blog post titled The Best of the Aleph Blog, Part 42
Photo Credit: michel D’anastasio=========================In my view, these were my best posts written between May 2017 and July 2017:The Biggest Problems For Investors TodayThe “two-minute question” with a half hour response.Perceived Versus Real Risk ToleranceWhy questions about objective measures of risk tolerance need to be asked before querying someone about their subjective risk tolerance.Overvaluation is NOT Due to Passive InvestingActive managers as a group are very similar to the index.  That shares move from active to passive managers does not affect their...
117 days ago
The Aleph Blog wrote a new blog post titled The Best of the Aleph Blog, Part 41
Photo Credit: Renaud Camus=========================In my view, these were my best posts written between February 2017 and April 2017:Problems with Constant Compound Interest (6)It is very difficult to get a high real rate of return over a long time.  This article peels apart the math, and brings out the quantitative factors that play a role in the analysis.Yield = Poison (3)When the yield premiums for taking most forms of additional risk are too low, it’s time to take much less risk, and reduce yield considerably.Streaking Into the Record Books?Remember the streak of days where the...
119 days ago
The Aleph Blog wrote a new blog post titled The Best of the Aleph Blog, Part 40
Photo Credit: michel D’anastasio======================In my view, these were my best posts written between November 2016 and January 2017:When I was a Boy…Can lessons from the distant past illumine the future?  I think so.On Long-Term Corporate InvestmentsThis is timely.  Are US firms too short-term in their orientation? No.  To be more controversial, if companies in the rest of the world imitate the US, they will be better off.  They don’t push the present hard enough, and the great long-term returns don’t materialize as a result.How do you Manage a Company when the Stock...
120 days ago
The Aleph Blog wrote a new blog post titled The Best of the Aleph Blog, Part 39
Photo Credit: michel D’anastasio====================In my view, these were my best posts written between August 2016 and October 2016:What to do when Ethics are DiscouragedEight ways to promote ethics where it is not popular.On Pricing Grids, Part 1On Pricing Grids, Part 1aOn how to price illiquid bonds, and why GAAP accounting does not matter for financial stock prices.The Cash Will Prove ItselfOn Donald Trump, during a time in 1990, when he said in the midst of a personal business financial crisis said:“What I want to do is go and bargain hunt,” he said. “I want to be king of cash.”I...
124 days ago
The Aleph Blog wrote a new blog post titled The Balance: On Private Activity Bonds
Photo Credit: Thomas Hawk=================For about two months, I wondered when I would write this.  Now I know… I’m writing it now.  To all my readers, I am letting you know that Aleph Blog is not ending, but it is changing.  I accepted a writing assignment with The Balance.  I am going to write 4-5 articles for them per month, and correct some old articles as well.  I will publish links to them here.  Like Aleph Blog, The Balance is free, so you don’t have to do anything more than click on the article link here to read it.Why did I do this?  I felt I was getting stale in...
130 days ago
The Aleph Blog wrote a new blog post titled The Best of the Aleph Blog, Part 38
Photo Credit: michel D’anastasio===============In my view, these were my best posts written between May 2016 and July 2016:You Can Get Too PessimisticIn general, I think there is no value in preparing for the “total disaster” scenario if you live in the developed world.  No one wants to poison their own prosperity, and so the rich and powerful hold back from being too rapacious.<snip>The sun will rise tomorrow, Lord helping us… so diversify and take moderate risks most of time.Risk vs Return — The Dirty SecretAfter a certain point, additional risk reduces returns, because average...
130 days ago
The Aleph Blog wrote a new blog post titled The Best of the Aleph Blog, Part 37
Photo Credit: michel D’anastasio==========In my view, these were my best posts written between February 2016 and April 2016:On Investment CharlatansMostly regarding some scammers pitching preferred stock, but without calling it that.  Always be wary of those that won’t be direct with you.If Someone Tries to Sell You, Don’t Buy It“Don’t buy what someone else wants to sell you.  Buy what you have researched that you want to buy.”They Can’t Help YouOn a Letter from an ExpatriateOn another type of charlatans, the political sorts.  Two of the few things I had to say prior to the...
131 days ago
The Aleph Blog wrote a new blog post titled The Best of the Aleph Blog, Part 36
 Photo Credit: Renaud Camus====================In my view, these were my best posts written between November 2015 and January 2016:Don’t be a Miser in Retirement (Or Ever)It is possible to over-save, and underspend.  You should leave some inheritance for your heirs, but don’t deprive yourself of the benefits that having some assets provides.On Lump Sum DistributionsIn general it is better to take payments over time than to receive it as a lump sum.  If you do have a lump sum that comes to you, take care not to spend it too rapidly.On Currencies that are Not a Store of ValueHow...
140 days ago
The Aleph Blog wrote a new blog post titled The Best of the Aleph Blog, Part 35
The Best of the Aleph Blog, Part 35Photo Credit: Renaud Camus ====================In my view, these were my best posts written between August 2015 and October 2015:Learning from the Past, Part 6 [Hopefully Final, But It Won’t Be…]The currently final episode on my investing errors, covering the last eight years.  Note that Valero has made me five times on my initial investment, though, and I still own it now.  This piece has…View On WordPress
200 days ago
The Aleph Blog wrote a new blog post titled The Best of the Aleph Blog, Part 35
Photo Credit: Renaud Camus====================In my view, these were my best posts written between August 2015 and October 2015:Learning from the Past, Part 6 [Hopefully Final, But It Won’t Be…]The currently final episode on my investing errors, covering the last eight years.  Note that Valero has made me five times on my initial investment, though, and I still own it now.  This piece has more of the bright side of what I learned.Musings on the Wealth Effect“None of the ways I mentioned for getting more money for spending out of investments is likely to produce a lot of additional...
201 days ago
The Aleph Blog wrote a new blog post titled The Best of the Aleph Blog, Part 34
Photo Credit: Renaud Camus=========================In my view, these were my best posts written between May 2015 and July 2015:Learning from the Past, Part 5b [Institutional Stock Version]Learning from the Past, Part 5c [Institutional Stock Version]How I did a bad job for Hovde on Scottish Re and National Atlantic Holdings.  Also, what I did to mitigate the errors.  (And I am supposed to be really good with insurance companies…)The SEC Pursues a Fool’s ErrandOn why the Consolidated Audit Trial [CAT] is a bad idea.  Preventing “flash crashes” is not a desirable goal; they...
210 days ago
The Aleph Blog wrote a new blog post titled The Pips are Squeaking
The Pips are SqueakingPhoto Credit: sid=================This should be a short post.  I just want to note the degree of stress that many emerging market countries are under.  The Fed raises rates, and something blows up.  That is often the class of debt that has grown the most in the bull phase of the cycle, or, the one that has financed with short-term debt.  This is the “volatility machine” that Michael Pettis…View On WordPress
216 days ago
The Aleph Blog wrote a new blog post titled The Pips are Squeaking
Photo Credit: sid=================This should be a short post.  I just want to note the degree of stress that many emerging market countries are under.  The Fed raises rates, and something blows up.  That is often the class of debt that has grown the most in the bull phase of the cycle, or, the one that has financed with short-term debt.  This is the “volatility machine” that Michael Pettis wrote so well about.The Brazilian stocks I own have been falling.  A little lower, and I will make them double-weight positions.  Five times earnings for utilities that cannot be done without? ...
217 days ago
The Aleph Blog wrote a new blog post titled Thoughts on Bank Debt
Thoughts on Bank DebtPhoto Credit: Teemu008I have long said that until an asset class goes through a “failure cycle,” risk-based pricing will be weak toward the assets in question.  One asset class that has become popular of late is bank debt.  Bank debt is a loan to a corporation that typically has first priority to make claims on the company in bankruptcy, ahead of the bondholders, much less the preferred…View On WordPress
221 days ago
The Aleph Blog wrote a new blog post titled Thoughts on Bank Debt
Photo Credit: Teemu008 I have long said that until an asset class goes through a “failure cycle,” risk-based pricing will be weak toward the assets in question.  One asset class that has become popular of late is bank debt.  Bank debt is a loan to a corporation that typically has first priority to make claims on the company in bankruptcy, ahead of the bondholders, much less the preferred stockholders and the common equity.Though it is called bank debt, often the loans are arranged by banks and allow others to lend alongside them.  This has become popular among closed-end...
221 days ago
The Aleph Blog wrote a new blog post titled Why I Watch the Thirty
Photo Credit: andy carter=============I like long bonds.  I am not saying that I like them as an investment.  I like them because they tell me about the economy.Though I argued to the Obama Administration that they should issue Fifties, Centuries and Perpetuals, the Thirty-year bond remains the longest bond issued.  I think its yield tells us a lot about the economy.How fast is nominal growth?  Look at the Thirty; it is highly correlated with that.What should the Fed use for its monetary policy?  Look at the Thirty, and don’t let the Five-year note get a higher yield than it.  Also,...
243 days ago