Have we all gone lazy? Are Americans no longer the restless go-getters they once were? Has our culture changed in ways that impede economic progress instead of naturally promoting it? In his new book, The Complacent Class, Tyler Cowen, one of the most eclectic and inventive of today’s authors on economic issues, says yes to all of these. Not so …
Have we all gone lazy? Are Americans no longer the restless go-getters they once were? Has our culture changed in ways that impede economic progress instead of naturally promoting it? In his new book, The Complacent Class, Tyler Cowen, one of the most eclectic and inventive authors on economic issues, says yes to all of these questions. Not so fast, …
Zero and negative nominal interest rates are something new under the sun. In 3,800 years of history, we’ve only observed near-zero rates a few times, and almost never negative ones. Of course, real rates have been negative for extended periods, but this is different. There is much that we do know about the relationship between nominal interest rates, inflation, real …
A common lament during the presidential campaign was middle-class income stagnation and the wealth of the top 1%. But are most people getting poorer while the rich get richer? In a sparkling – and delightfully short – new contribution to the econo-optimist genre, Johan Norberg, author of Progress: Ten Reasons to Look Forward to the Future, emphatically answers “no.” Consider …
Who would guess that the modern sciences of behavioral economics and the psychology of decision-making owe their origin to a love affair (no, not sexual) between two men born early in the last century and so different that one could barely imagine them speaking to each other? Yet that is the story chronicled by the extraordinary nonfiction writer Michael Lewis …
Why have defined contribution (DC) retirement plans delivered such uneven—and, on average, inadequate—results? How can DC sponsors, who are charged with most of the responsibility for retirement security in the United States and elsewhere, do better—much better? Can DC sponsors learn from defined benefit (DB) plans, which did achieve desirable outcomes in many cases? Can they hold on to the …
What effect will the index fund revolution and the Department of Labor’s (DOL) fiduciary rule have on active managers? The data shows that active management is still a healthy business model. But industry consolidation is coming and advisors will need to change the way they construct portfolios. Indexing is a very low-fee business, with the standard-setting fund Vanguard Index 500 …
If you care about finance and markets, you may think that the Fed chairman or chairwoman, not the U.S. president, is the most powerful person in the world. Thus, Alan Greenspan, who held that position longer than anyone else except William McChesney Martin a generation earlier, was arguably the most influential public official in the lifetimes of most readers of …
How much do savers need to save in order to meet their retirement income goals? While a great deal of effort has been expended in search of answers to this question, it turns out that a very simple and practical answer is almost in plain sight. It is under a small rock, the rock being the ordinary and familiar time-value-of-money …
Why have defined benefit (DB) pension plans, arguably the most elegantly engineered financial service ever created, stumbled so badly? Less than fifty years after achieving wide acceptance and providing predictable and secure benefits to their participants, many DB plans have been terminated, while others struggle to attain adequate funding levels. Many of the terminated DB plans have been replaced with …
Which currently popular investment fads are flashes in the pan, and which are actually worthy innovations? Which are somewhere in between? Because the theoretical or academic pedigree of an investment strategy helps mightily to sell it, marketers often represent whatever they’re selling as “real science,” with roots in the work of Nobel Prize-winning financial economists. Some of these claims are …
If you care about finance and markets, you may think that the Fed chairman or chairwoman, not the U.S. president, is the most powerful person in the world. Thus, Alan Greenspan, who held that position longer than anyone else except William McChesney Martin a generation earlier, was arguably the most influential public official in the lifetimes of most readers of …
The CAPE ratio, Cyclically Adjusted Price Earnings ratio, is a version of the price/earnings (PE) ratio popularized by Robert Shiller. It is widely used to assess the richness or cheapness of the equity market relative to its own history, and to make forecasts of the long-run return on equities, a vital input into asset allocation processes and retirement saving and …
Negative interest rates in Europe and Japan. Itsy-bitsy, teeny-weeny positive interest rates in the United States. One round of quantitative easing after another. An economy that stubbornly refuses to grow. Have we gone through Alice’s proverbial looking glass?
Not a day goes by without us hearing how miserable the state of the economy is. It is not really true—more people are living far above subsistence than at any other time in the history of the world—but a lot of things do need improvement. Poverty is and, seemingly, always will be with us. Governments are stretched to their limits …
Are stocks’ glory days behind us? What about bonds? As the late Merle Haggard asked in song, “Are the good times really over for good?” A widely circulated McKinsey Global Institute (MGI) report, Diminishing Returns: Why Investors May Need to Lower Their Expectations, suggests that they are. The report makes the case that both stock and bond returns over 1985-2014 …
Are stocks’ glory days behind us? What about bonds? As the late Merle Haggard asked in song, “Are the good times really over for good?” A widely circulated McKinsey Global Institute (MGI) report, Diminishing Returns: Why Investors May Need to Lower Their Expectations, suggests that they are. The report makes the case that both stock and bond returns over 1985-2014 …
Zero and negative nominal interest rates are something new under the sun. In 3800 years of history, we’ve only observed near-zero rates a few times, and almost never negative ones. Of course, real rates have been negative for extended periods, but this is different. There is much that we do know about the relationship between interest rates, inflation, savings, real …