Making Money in the Markets

This is a nice interview with David Booth, co-founder of Dimensional on market efficiency and related topics. The very last sentence in the article bears a look. This seems very true to me- given all the brokers and funds relying on the "black box theory", everyone isn't going to totally believe in efficient markets. Everyone does believe in making more money in the markets,however, and that is what EMH is all about.

Too Big to Fail

Some of you know of Professor Eugene Fama and his work on the Efficient Market Hypothesis (he actually did the original work on this in the 60's). This is a short video clip on that topic and also on his opinions on the large banks. He states that they are way undercapitalized and this creates huge distortions in the market. Good stuff!

A Growth Agenda

Art Laffer ,who has advised a wide array of folks in political life (from Jerry Brown to Ronald Reagan) wrote a nice article today in WSJ outlining a very specific agenda to regain economic growth. Most of these are familiar but I particularly liked the last one which involves incentive (or performance) pay for members of Congress. That would get some attention !

Reform the tax code and stop regulating

Kevin Warsh, the youngest member of the Federal Reserve Board penned that phrase in a long WSJ piece Monday. Larry Kudlow summarizes the piece here. Both commodities and equities have moved sharply higher in the short term in anticipation of what the Federal Reserve is doing now...BUT the real test (for equities anyway) is corporate earnings which have been good overall. Higher fuel and food prices are surely in the works.

A Stunning Stat on Real Estate Overhang

I saw this article over the weekend and was stunned by the data presented. The article outlines an almost 9 year supply of foreclosure and "shadow inventory" real estate owned by banks. Mortgage rates are at generational low levels and prices have dropped to reasonable levels in many parts of the country but this dramatic amount of supply will likely drive prices lower still. Real estate has utility and should be viewed that way. It might be an ok investment or it might not but either way that should be secondary not primary.