Category Archives: Uncategorized

For most of history, the Shiller Cyclically-Adjusted Price-Earnings ratio (CAPE) oscillated in a pseudo sine wave around a long-term (130 year) average of 15.30.  It spent 55% percent of the time above the average, and 45% of the time below–a reasonable … Continue reading →

In this piece, I’m going to derive and explain the Kalecki-Levy Corporate Profit equation, and then demonstrate its truth empirically using data collected by the BEA.  I’m then going to present tables that show the values of the components of … Continue reading →

NYSE Margin Debt just reached another record high, and an increasing number of market skeptics are expressing concerns.  They reason as follows.  A willingness to buy stocks on margin suggests confidence and optimism.  But markets don’t perform well when investors are already … Continue reading →

At each quarterly meeting, FOMC members are asked to state what they think would be an appropriate forward path for the Fed Funds Rate, given their present expectations about future inflation and unemployment.  The following table and chart show how … Continue reading →

In 2003 and 2004, a debate emerged in academic and financial circles over the appropriateness of the Fed’s “easy money” response to the crash of the tech bubble and the ensuing recession.  Hawks argued that the Fed’s low rate policy … Continue reading →

The following chart shows nominal total equity returns in local currency terms for select developed market countries from the beginning of January 1970 through the end of August 2013. The UK is way out ahead of the pack, almost doubling … Continue reading →

Earningless bull markets are bull markets in which stock prices rise substantially despite falling earnings.  Consider two examples from U.S. market history (price and EPS are for the S&P 500): Both of these earningless bull markets started from low valuations. … Continue reading →

This piece looks at issues related to the “Great Rotation”, the view that U.S. investors are in the early stages of a reallocation of their wealth out of bonds and into stocks.  The interesting charts are at the end, so … Continue reading →

The Performance of the Fed Model A Charitable Interpretation The Fed Model’s Mistake Legitimate Ways to Use the Equity Risk Premium Buying the Nikkei at 9,600 in September 2010 Buying the S&P at 1400 in December 2012 In the last … Continue reading →

We can distinguish between two types of investments: liquid investments and illiquid investments.  An example of a liquid investment would be the online purchase of a stock.  If you change your mind two seconds after making the purchase, you can … Continue reading →