Shakespeare and Tax Reform

By |2018-01-29T13:15:58+00:00January 29th, 2018|Categories: Global Market Update|Tags: , , , |

What we call things is important. Photo: Victor Hanacek. Source: Picjumbo How items are defined can have real-world implications on how they’re treated. Consider the latest changes in the tax code. Individuals can now only deduct up to $10,000 of the State and local taxes they pay. So high-income people in high-tax states like New York, California, and Vermont could end up paying more on their Federal income taxes than they would if they lived in a [...]

The Fickle Finger of Fraud

By |2017-03-29T14:27:55+00:00March 29th, 2017|Categories: Global Market Update|Tags: , , , |

How do you smell a rat? Charles Ponzi, author of the first Ponzi scheme. Source: Boston Public Library Detecting financial fraud can be challenging. We know there are lots of people who want our money. It takes decades, sometimes a lifetime, to build a nest egg. It’s important to safeguard it. But in the real world people lie, cheat, and steal. Financial products are especially prone to distortion and deception, with complex legal provisions and mind-bending mathematical [...]

Trust, Trusts, and Family

By |2016-11-17T15:39:41+00:00October 27th, 2016|Categories: Global Market Update|Tags: , , , |

Trust, Trusts, and Family Who do you trust? King Lear and his daughters, by Benjamin West (1793). Source: Folger Shakespeare Library When people make an estate plan, they need to decide what to do with their money. One of the most important decisions is choosing a trustee. Because a trustee will control the assets, usually for a long time. So making the right choice will have far-reaching consequences. Shakespeare writes about this kind of decision in King [...]

Truth-Telling and Fools

By |2016-11-17T15:40:53+00:00September 30th, 2016|Categories: Global Market Update|Tags: , , |

Who tells you the truth? King Lear and his Fool. Artist: Ary Scheffer. Source: Folger Library No one wants to hear bad news. That’s why accountants and finance professionals are often so unpopular. A leader may have grand visions for the future filled with growth and opportunity—but his finance people tell him he doesn’t have the money to pay for it. Good leaders listen to counsel; bad leaders shoot the messenger, surrounding themselves with toadies and sycophants. [...]

The Tyranny of Norms

By |2016-11-17T15:43:18+00:00August 25th, 2016|Categories: Global Market Update|Tags: , , |

Will the economy ever get back to normal? Source: New York Fed Fed officials keep telling us what they want. But that’s not their job. The Fed was established to support the banking system—to serve as bankers to the bankers. Part of that job involves managing bank reserves, the money supply, and short-term interest rates. The 1978 Humphrey-Hawkins legislation specifically instructed the Fed to pursue two goals: full employment and price stability. This is sometimes called the [...]

The Biased Investor (Part 5)

By |2016-11-17T15:48:42+00:00June 8th, 2016|Categories: Global Market Update|Tags: , , , |

What does it mean to be rational? Illustration: Friedrich Blitz. Source: Wikipedia We need to make decisions every day about all kinds of things: what to eat, what to wear, how to answer the latest question from family members or co-workers or clients. Sometimes, we have time to think things through. Often, however, we don’t have that luxury—so we develop shortcuts, rules-of-thumb, that help us decide what to do pretty quickly. For example, the weather is pretty [...]

The Wisdom of Fools

By |2016-11-17T15:52:12+00:00May 2nd, 2016|Categories: Global Market Update|Tags: , , |

Who tells you the truth? Stanczyk by Jan Matejko. Source: Warsaw National Art Museum There’s a tragic cycle in human affairs. A leader solves a problem and is celebrated for their wisdom or decisiveness or practical understanding. They’re given more and more authority. Eventually, all the adulation goes to their head. They don’t want to hear bad news—who does?—and acquire toadies and sycophants who only tell them what they want to hear. Eventually, the leader overreaches—they try [...]

By Any Other Name …

By |2016-11-17T15:53:54+00:00April 12th, 2016|Categories: Global Market Update|Tags: , , |

Do names matter? Photo: Laitche. Source: Wikimedia In Romeo and Juliet,Juliet famously questions if a rose would smell just as sweet if we called it something else. And the answer to that is, both yes and no. The fragrance would be the same, of course. But the “sweetness”? That’s purely subjective. It’s based on our experience and expectations, as well as what we might compare it to. In “The Hunger Games” the villain -- President Snow -- [...]

Investment Management / Self Management

By |2016-11-17T16:02:36+00:00December 31st, 2015|Categories: Global Market Update|Tags: , , |

Do our emotions work against us? Source: Wikipedia They can with investing. Our own fears or doubts or arrogance get in the way. For example, most of us are afraid of losses: the pain of losing money is a lot worse than the regret we might feel by missing out in an up market. So we leave our money in safe, low-interest bank deposits rather than risk it in a volatile market, even though we know inflation [...]

Interest Rates, Janet Yellen, and The Bard

By |2016-11-17T16:02:48+00:00December 17th, 2015|Categories: Global Market Update|Tags: , , , |

What did the Fed just do? Narrowly considered, the Fed simply changed the wording in their periodic statement, announcing that the range for inter-bank interest rates—Fed Funds—would go from zero to .25% to .25% to .5%. In other words, the rate will move from “essentially zero” to “almost zero.” Practically, if a bank borrows $1mm from another bank overnight, they’ll have to pay $13.89 rather than $6.94. You could almost call this the “Macbeth” interest rate move: [...]