Monkey Economics

Posted on May 22, 2015 by MN Gordon

Despite the advent of the tablet phone and microwave kettle corn, there are still rudimentary evolutionary responses hardwired into the core of the human psyche.  During moments of failing they take over and suppress clear thinking.  How else can one explain modern man’s continued imbecilities?

Perhaps at another time and another place this animal instinct served a valuable purpose.  The luxury of thoughtful contemplation wasn’t always an option.  When backed into a corner just a moment of hesitation could mean the difference between life and death.

These days this archaic trait can become a great liability when put to the test.  For instance, rather than slamming on the brakes to prevent a bus from driving off the cliff, a driver will often do the opposite…they’ll accelerate.

Several months ago the European Central Bank (ECB) initiated a new mass money debasement scheme.  It involved buying €60 billion ($66 billion) a month of European government bonds.  Somehow this was supposed to improve the economy. Continue reading →

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Get Paid by Politicians

Posted on May 19, 2015 by MN Gordon

Get Paid by Politicians“I’m out here studying what appears to be an epidemic of arrested development in the American Dream,” wrote Hunter S. Thompson from San Francisco to a New York Editor in the mid-1960s.

Fifty years later the effects of this epidemic have spread their ails across the entire American landscape.  You can hardly peer about without evidence of the rampant degeneration – be it lack of manners or people too large for their sweat pants – lacerating your eyeballs.

There’s not much you can do to stop it.  But you don’t have to be part of it.  What’s more, there are ways you can make the best of it.

Today’s insights are for the patient and shrewd individual.  If you are one among these few and far between fellows you’ll delight – and prosper – from what follows.  And even if you can’t hold on to a buck, for fear it’ll burn your fingers, you may somehow find it within yourself to exploit this clever and elegant opportunity.

You only live once.  Why not dare to do something that’s both fun and profitable…and a little subversive? Continue reading →

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Pinching the Losers in Congress

Posted on May 15, 2015 by MN Gordon

Pinching the Losers in CongressFinancial markets are remarkably confounding.  If you’ve ever speculated on stock price movements, you know what we mean.  Predicting where the market will go is hard enough.  But knowing exactly when…that’s nearly impossible.

Looking back, assigning causation, and projecting forward, doesn’t do the trick.  Neither does charting out wave patterns and drawing trend lines.  For eventually trend lines are broken.  Then what?

The point is, stocks go up and then they go down.  So, too, they go down and then they go up.  But sometimes times they go down and then they go down some more.  For what’s absolutely the right time to buy at one time is spectacularly wrong at another.  And what’s spectacularly the wrong time to buy at one time is absolutely right at another.

Take Southwest Airlines, for instance.  It was last year’s top performing S&P 500 stock…returning 124.63 percent.  This year, however, as of May 14, it was down 0.47 percent.

Make of it what you will.  But, by shrewd acumen alone, we don’t think there were many who purchased Southwest Airlines on January 1 and sold on December 31, 2014.  That would involve good luck, in addition to great guesswork. Continue reading →

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Bear Witness to the Madness

Posted on May 12, 2015 by MN Gordon

Second-rate economic data is first-rate news for Wall Street these days.  We don’t quite comprehend the logic.  But the popular reasoning goes something like this…

Good economic data is bad for stocks.  For it means the Fed will begin increasing rates sooner rather than later.  Higher rates are bad for the stock market because of increased borrowing costs.

Nonetheless, bad economic data is also bad for stocks.  For it means the economy could be slowing into recession.  Declining corporate earnings and contracting growth should push stock prices down.

The sweet spot, however, is in the middling.  Moderate growth means corporate earnings should hold.  It also means the Fed will delay raising rates…which furthers Wall Street’s glee.

This is simply absurd, we know.  But just because it is absurd doesn’t mean we should deny it.  We may not understand it, we may not agree with it.  Yet it is happening all the same.  Who are we to resist it? Continue reading →

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