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Why stocks are good hedges for inflation.

June 10, 2019 Comments (0)

I was quoted yesterday in the Wall Street Journal on why stocks are good hedges for inflation. Article is here: Quoting from the article: The reason stocks are a decent inflation hedge is because corporate earnings grow faster when inflation is higher, and grow more slowly when inflation is lower, according to Richard Warr, a finance professor at North...

Bogle and the genius of indexing.

February 21, 2019 Comments (0)

Jack Bogle passed away this week and the investing world lost one of the most important figures in modern history.   Bogle's contribution to investing is simple but of profound importance.  He showed that an index fund, run entirely passively, could outperform most actively managed funds in the long run.  I've long been a very strong proponent of indexing.  I've posted heavily on the topic here in this blog, but a quick recap of why indexing is so brilliant is...

IBM to buy Redhat.

October 31, 2018 Comments (0)

An interesting deal.  IBM has a strong presence in this area, and of course Redhat is a Raleigh based company.   Details of the deal are here: A back of the envelope analysis suggests that there's about $7bn in merger gains.

GE cuts dividends

October 31, 2018 Comments (0)

Dividend cuts are quite rare and even rarer for a stallwart stock like GE.  But yesterday, GE cut it's dividend to a penny a share. There wasn't much of a price reaction, the stock had been on a downward trend, but the dividend cut certainly didn't help. A dividend cut signaled that GE is struggling, but I don't think that was news to anyone.  Even an analyst upgrade didn't help the stock...

Do pro-diversity policies lead to greater corporate innovation?

January 11, 2018 Comments (0)

That's the question that we (myself, Roger Mayer of NC State and Jing Zhao at Portland State) recently studied in a paper that's forthcoming in the finance journal: Financial Management. The answer is YES.   We found that firms that promote diversity have more new products, more patents and more influential patents. You can read the paper here: Here's the summary on the NC State news...

Bitcoin is a fraud says JPM boss

September 13, 2017 Comments (0) The problem with Bitcoin, as I see it, is that it is a commodity and not a currency.   It's largely like gold, except that gold has some use outside of being a means of speculation. While I wouldn't be surprised if Bitcoin remains marginalized, what is more important is the role that blockchain technology will play in finance in the future.

The stupidest thing you can do with your money.

August 1, 2017 Comments (0)

In a recent episode, the Freakanomics podcast talks about why you should index.  It's a great show - check it out: Interestingly, Anthony Scaramucci is interviewed as being an advocate of active management (he's the guy who ended up being fired by Trump after 10 days).  Scaramucci's arguments for active management don't really make any sense - they are based on the idea that financial advisors and active management are the same...

Why 8.5% is delusional

July 20, 2017 Comments (0)

I am quoted today in an article on about the Connecticut pension fund return assumptions.  The article is here: So why is an 8.5% return assumption delusional? It's pretty simply really.  Assume that your fund is 50% bonds, 50% stocks.  Currently 10-year Treasuries are yielding about 2.3%.  Let's round that up to say 3% to be generous....

Will fee cutting hurt the pension fund?

July 15, 2017 Comments (0)

In an article yesterday in the News and Observer (, David Ranii explores whether fee cutting by the pension fund might hurt future returns. It's a good article, I was interviewed for it, and I recommend that you read it.  I would, however, like to add a small comment/clarification with regard to my comments within the article. While I strongly support attempts by the pension fund to reduce fees, this has to be done in a...

Folwell reduces fees by $50m

June 14, 2017 Comments (0)

Some good news from the Treasurer's office.  Apparently our new Treasurer has reduced fees by $50 million so far.  He reports that he's on track to hit $200 million by the end of his first term. This is great news.   I am sure we will be digging into the numbers when the annual report comes out, but for now, this is a great start.