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Publication Name: The Aleph Blog

Brief description: Helping Institutions and Ordinary People Invest Better by Focusing on Risk Control

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Owner Name: David J. Merkel

Joined: August 20th, 2011

Activity

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,...
(4 days ago)

The Aleph Blog wrote a new blog post titled Notes on the Fed Announcements

Photo Credit: City of Boston Archives==========================Listening to the Fed Chair’s press conference, there was one thing where I disagreed with what Powell was saying.  He said a few times that they only made one decision at the FOMC meeting, that of raising the Fed Funds rate and the reverse repo rate by 0.25%.  They made another decision as well. The decided to raise the rate of quantitative tightening [QT] by increasing the rate of Treasury, MBS and agency bonds rolloff by $10B/month starting in April. They did that by increasing the rate of reduction of MBS and agency bonds...
(33 days ago)

The Aleph Blog wrote a new blog post titled Just Don’t Invert the Yield Curve

Photo Credit: Brookings Institution================================Jerome Powell is not an economist, and as such, has the potential to try to remake the way the Fed does monetary policy.  Rather than hold onto outmoded ideas ideas like the Phillips Curve, which may have made sense when the US was a more insular economy, there are better ways to think of monetary policy from a structural standpoint of how financial firms work.(Note: the Phillips Curve relies on a very simple assumption that goods and services price inflation stems from wage inflation, and that wage inflation occurs when...
(34 days ago)

About:

David J. Merkel, CFA, FSA — 2010-present, I am working on setting up my own equity asset management shop, tentatively called Aleph Investments.  It is possible that I might do a joint venture with someone else if we can do more together than separately.

From 2008-2010, I was the Chief Economist and Director of Research of Finacorp Securities.  I did a many things for Finacorp, mainly research and analysis on a wide variety of fixed income and equity securities, and trading strategies.

Until 2007, I was a senior investment analyst at Hovde Capital, responsible for analysis and valuation of investment opportunities for the FIP funds, particularly of companies in the insurance industry. I also managed the internal profit sharing and charitable endowment monies of the firm.

From 2003-2007, I was a leading commentator at the investment website RealMoney.com.  Back in 2003, after several years of correspondence, James Cramer invited me to write for the site, and I wrote for RealMoney on equity and bond portfolio management, macroeconomics, derivatives, quantitative strategies, insurance issues, corporate governance, etc. My specialty is looking at the interlinkages in the markets in order to understand individual markets better.  I no longer contribute to RealMoney; I scaled it back because my work duties have gotten larger, and I began this blog to develop a distinct voice with a wider distribution.  After three-plus year of operation, I believe I have achieved that.

Prior to joining Hovde in 2003, I managed corporate bonds for Dwight Asset Management. In 1998, I joined the Mount Washington Investment Group as the Mortgage Bond and Asset Liability manager after working with Provident Mutual, AIG and Pacific Standard Life.

My background as a life actuary has given me a different perspective on investing. How do you earn money without taking undue risk? How do you convey ideas about investing while showing a proper level of uncertainty on the likelihood of success? How do the various markets fit together, telling us us a broader story than any single piece? These are the themes that I will deal with in this blog.

I hold bachelor’s and master’s degrees from Johns Hopkins University. In my spare time, I take care of our eight children with my wonderful wife Ruth.

Blog Objectives

My objectives in this blog are relatively simple:

  • To further flesh out my thoughts from RealMoney, and provide for a greater degree of interaction with readers there.
  • To interact more broadly with the blogosphere, adding my own distinct ideas to the mix.
  • To develop an investment management shop. Initially, this would be institutional money management on a “long only” and hedged basis. Eventually, I would create a mutual fund so that smaller retail investors can invest with me. I would try to buy up a failed mutual fund shell, allowing a way in that is cheaper, and providing tax-sheltered gains to early investors. But all of this is a dream that might not be realized. Until then, I can tell you about managers who manage money in a way similar to mine.
  • All of these goals rely on the help of Jesus Christ and my readers. I thank you for taking the time to read what I write.